Correlation Between Technology One and BHP Group
Can any of the company-specific risk be diversified away by investing in both Technology One 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 Technology One and BHP Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Technology One and BHP Group Limited, you can compare the effects of market volatilities on Technology One 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 Technology One with a short position of BHP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Technology One and BHP Group.
Diversification Opportunities for Technology One and BHP Group
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Technology and BHP is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Technology One 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 Technology One 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 Technology One 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 Technology One i.e., Technology One and BHP Group go up and down completely randomly.
Pair Corralation between Technology One and BHP Group
Assuming the 90 days trading horizon Technology One is expected to generate 1.12 times more return on investment than BHP Group. However, Technology One is 1.12 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 0.0 per unit of risk. If you would invest 1,428 in Technology One on November 1, 2024 and sell it today you would earn a total of 1,617 from holding Technology One or generate 113.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Technology One vs. BHP Group Limited
Performance |
| Timeline |
| Technology One |
| BHP Group Limited |
Technology One and BHP Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Technology One and BHP Group
The main advantage of trading using opposite Technology One and BHP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Technology One 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.| Technology One vs. Falcon Metals | Technology One vs. Vulcan Steel | Technology One vs. Aurelia Metals | Technology One vs. 29Metals |
| 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments |