Correlation Between Regal Investment and BHP Group
Can any of the company-specific risk be diversified away by investing in both Regal Investment 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 Regal Investment and BHP Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regal Investment and BHP Group Limited, you can compare the effects of market volatilities on Regal Investment 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 Regal Investment with a short position of BHP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regal Investment and BHP Group.
Diversification Opportunities for Regal Investment and BHP Group
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Regal and BHP is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Regal Investment 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 Regal Investment 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 Regal Investment 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 Regal Investment i.e., Regal Investment and BHP Group go up and down completely randomly.
Pair Corralation between Regal Investment and BHP Group
Assuming the 90 days trading horizon Regal Investment is expected to generate 0.98 times more return on investment than BHP Group. However, Regal Investment is 1.02 times less risky than BHP Group. It trades about 0.09 of its potential returns per unit of risk. BHP Group Limited is currently generating about -0.01 per unit of risk. If you would invest 253.00 in Regal Investment on September 19, 2024 and sell it today you would earn a total of 90.00 from holding Regal Investment or generate 35.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regal Investment vs. BHP Group Limited
Performance |
| Timeline |
| Regal Investment |
| BHP Group Limited |
Regal Investment and BHP Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regal Investment and BHP Group
The main advantage of trading using opposite Regal Investment and BHP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regal Investment 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.| Regal Investment vs. EROAD | Regal Investment vs. Black Rock Mining | Regal Investment vs. MotorCycle Holdings | Regal Investment vs. Lendlease Group |
| BHP Group vs. Austco Healthcare | BHP Group vs. Sonic Healthcare | BHP Group vs. Argo Investments | BHP Group vs. Regal Investment |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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