Correlation Between Longvie SA and BHP Group
Can any of the company-specific risk be diversified away by investing in both Longvie SA 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 Longvie SA and BHP Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Longvie SA and BHP Group Limited, you can compare the effects of market volatilities on Longvie SA 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 Longvie SA with a short position of BHP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Longvie SA and BHP Group.
Diversification Opportunities for Longvie SA and BHP Group
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Longvie and BHP is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Longvie SA 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 Longvie SA 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 Longvie SA 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 Longvie SA i.e., Longvie SA and BHP Group go up and down completely randomly.
Pair Corralation between Longvie SA and BHP Group
Assuming the 90 days trading horizon Longvie SA is expected to generate 1.67 times more return on investment than BHP Group. However, Longvie SA is 1.67 times more volatile than BHP Group Limited. It trades about 0.12 of its potential returns per unit of risk. BHP Group Limited is currently generating about -0.17 per unit of risk. If you would invest 3,625 in Longvie SA on September 19, 2024 and sell it today you would earn a total of 535.00 from holding Longvie SA or generate 14.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Longvie SA vs. BHP Group Limited
Performance |
| Timeline |
| Longvie SA |
| BHP Group Limited |
Longvie SA and BHP Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Longvie SA and BHP Group
The main advantage of trading using opposite Longvie SA and BHP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Longvie SA 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.| Longvie SA vs. Fiplasto SA | Longvie SA vs. Edesa Holding SA | Longvie SA vs. Vista Energy, SAB | Longvie SA vs. American Express Co |
| BHP Group vs. Rio Tinto PLC | BHP Group vs. Vale SA | BHP Group vs. Edesa Holding SA | BHP Group vs. Longvie SA |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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