Correlation Between Pampa Energia and BHP Group
Can any of the company-specific risk be diversified away by investing in both Pampa Energia 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 Pampa Energia and BHP Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pampa Energia SA and BHP Group Limited, you can compare the effects of market volatilities on Pampa Energia 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 Pampa Energia with a short position of BHP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pampa Energia and BHP Group.
Diversification Opportunities for Pampa Energia and BHP Group
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Pampa and BHP is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Pampa Energia 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 Pampa Energia 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 Pampa Energia 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 Pampa Energia i.e., Pampa Energia and BHP Group go up and down completely randomly.
Pair Corralation between Pampa Energia and BHP Group
Assuming the 90 days trading horizon Pampa Energia SA is expected to generate 0.64 times more return on investment than BHP Group. However, Pampa Energia SA is 1.57 times less risky than BHP Group. It trades about 0.76 of its potential returns per unit of risk. BHP Group Limited is currently generating about -0.28 per unit of risk. If you would invest 308,000 in Pampa Energia SA on August 30, 2024 and sell it today you would earn a total of 69,500 from holding Pampa Energia SA or generate 22.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pampa Energia SA vs. BHP Group Limited
Performance |
| Timeline |
| Pampa Energia SA |
| BHP Group Limited |
Pampa Energia and BHP Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pampa Energia and BHP Group
The main advantage of trading using opposite Pampa Energia and BHP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pampa Energia 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.| Pampa Energia vs. Transportadora de Gas | Pampa Energia vs. Telecom Argentina | Pampa Energia vs. Harmony Gold Mining | Pampa Energia vs. Compania de Transporte |
| BHP Group vs. Rio Tinto PLC | BHP Group vs. Vale SA | BHP Group vs. Bolsas y Mercados | BHP Group vs. BBVA Banco Frances |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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