Correlation Between Dug Technology and BHP Group
Can any of the company-specific risk be diversified away by investing in both Dug Technology 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 Dug Technology and BHP Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dug Technology and BHP Group Limited, you can compare the effects of market volatilities on Dug Technology 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 Dug Technology with a short position of BHP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dug Technology and BHP Group.
Diversification Opportunities for Dug Technology and BHP Group
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dug and BHP is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Dug Technology 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 Dug Technology 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 Dug Technology 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 Dug Technology i.e., Dug Technology and BHP Group go up and down completely randomly.
Pair Corralation between Dug Technology and BHP Group
Assuming the 90 days trading horizon Dug Technology is expected to generate 2.24 times more return on investment than BHP Group. However, Dug Technology is 2.24 times more volatile than BHP Group Limited. It trades about 0.05 of its potential returns per unit of risk. BHP Group Limited is currently generating about 0.0 per unit of risk. If you would invest 81.00 in Dug Technology on November 1, 2024 and sell it today you would earn a total of 54.00 from holding Dug Technology or generate 66.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dug Technology vs. BHP Group Limited
Performance |
| Timeline |
| Dug Technology |
| BHP Group Limited |
Dug Technology and BHP Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dug Technology and BHP Group
The main advantage of trading using opposite Dug Technology and BHP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dug Technology 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.| Dug Technology vs. oOhMedia | Dug Technology vs. Land Homes Group | Dug Technology vs. Mount Gibson Iron | Dug Technology vs. Iron Road |
| BHP Group vs. Cosmo Metals | BHP Group vs. Regal Funds Management | BHP Group vs. Dug Technology | BHP Group vs. Technology One |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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