Correlation Between SAFETY MEDICAL and BHP Group
Can any of the company-specific risk be diversified away by investing in both SAFETY MEDICAL 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 SAFETY MEDICAL and BHP Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SAFETY MEDICAL PROD and BHP Group Limited, you can compare the effects of market volatilities on SAFETY MEDICAL 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 SAFETY MEDICAL with a short position of BHP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of SAFETY MEDICAL and BHP Group.
Diversification Opportunities for SAFETY MEDICAL and BHP Group
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SAFETY and BHP is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding SAFETY MEDICAL PROD 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 SAFETY MEDICAL 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 SAFETY MEDICAL PROD 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 SAFETY MEDICAL i.e., SAFETY MEDICAL and BHP Group go up and down completely randomly.
Pair Corralation between SAFETY MEDICAL and BHP Group
Assuming the 90 days trading horizon SAFETY MEDICAL PROD is expected to under-perform the BHP Group. In addition to that, SAFETY MEDICAL is 1.52 times more volatile than BHP Group Limited. It trades about -0.3 of its total potential returns per unit of risk. BHP Group Limited is currently generating about -0.03 per unit of volatility. If you would invest 2,488 in BHP Group Limited on September 19, 2024 and sell it today you would lose (26.00) from holding BHP Group Limited or give up 1.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
SAFETY MEDICAL PROD vs. BHP Group Limited
Performance |
| Timeline |
| SAFETY MEDICAL PROD |
| BHP Group Limited |
SAFETY MEDICAL and BHP Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SAFETY MEDICAL and BHP Group
The main advantage of trading using opposite SAFETY MEDICAL and BHP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SAFETY MEDICAL 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.| SAFETY MEDICAL vs. ADRIATIC METALS LS 013355 | SAFETY MEDICAL vs. Zijin Mining Group | SAFETY MEDICAL vs. Perseus Mining Limited | SAFETY MEDICAL vs. RETAIL FOOD GROUP |
| BHP Group vs. SAFETY MEDICAL PROD | BHP Group vs. Apollo Medical Holdings | BHP Group vs. Pembina Pipeline Corp | BHP Group vs. Major Drilling Group |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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