Correlation Between Central Asia and BHP Group
Can any of the company-specific risk be diversified away by investing in both Central Asia and BHP Group at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Central Asia and BHP Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Central Asia Metals and BHP Group Limited, you can compare the effects of market volatilities on Central Asia and BHP Group and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Central Asia with a short position of BHP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Asia and BHP Group.
Diversification Opportunities for Central Asia and BHP Group
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Central and BHP is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Central Asia Metals and BHP Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BHP Group Limited and Central Asia is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Central Asia Metals are associated (or correlated) with BHP Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BHP Group Limited has no effect on the direction of Central Asia i.e., Central Asia and BHP Group go up and down completely randomly.
Pair Corralation between Central Asia and BHP Group
Assuming the 90 days trading horizon Central Asia is expected to generate 5.52 times less return on investment than BHP Group. In addition to that, Central Asia is 1.83 times more volatile than BHP Group Limited. It trades about 0.02 of its total potential returns per unit of risk. BHP Group Limited is currently generating about 0.2 per unit of volatility. If you would invest 196,300 in BHP Group Limited on October 24, 2024 and sell it today you would earn a total of 7,700 from holding BHP Group Limited or generate 3.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.0% |
| Values | Daily Returns |
Central Asia Metals vs. BHP Group Limited
Performance |
| Timeline |
| Central Asia Metals |
| BHP Group Limited |
Central Asia and BHP Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Asia and BHP Group
The main advantage of trading using opposite Central Asia and BHP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Asia position performs unexpectedly, BHP Group can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in BHP Group will offset losses from the drop in BHP Group's long position.| Central Asia vs. Verizon Communications | Central Asia vs. Various Eateries PLC | Central Asia vs. Cairn Homes PLC | Central Asia vs. Tyson Foods Cl |
| BHP Group vs. Ecclesiastical Insurance Office | BHP Group vs. Indutrade AB | BHP Group vs. Air Products Chemicals | BHP Group vs. Central Asia Metals |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal |