Correlation Between Baker Hughes and SoftBank Group

Can any of the company-specific risk be diversified away by investing in both Baker Hughes and SoftBank 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 Baker Hughes and SoftBank Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Baker Hughes Co and SoftBank Group Corp, you can compare the effects of market volatilities on Baker Hughes and SoftBank 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 Baker Hughes with a short position of SoftBank Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baker Hughes and SoftBank Group.

Diversification Opportunities for Baker Hughes and SoftBank Group

0.32

Correlation Coefficient

Baker Hughes  SoftBank Group

Weak diversification

The 3 months correlation between Baker and SoftBank is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Baker Hughes Co and SoftBank Group Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SoftBank Group Corp and Baker Hughes 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 Baker Hughes Co are associated (or correlated) with SoftBank Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SoftBank Group Corp has no effect on the direction of Baker Hughes i.e., Baker Hughes and SoftBank Group go up and down completely randomly.

Pair Corralation between Baker Hughes and SoftBank Group

Assuming the 90 days trading horizon Baker Hughes Co is expected to generate 0.61 times more return on investment than SoftBank Group. However, Baker Hughes Co is 1.65 times less risky than SoftBank Group. It trades about 0.05 of its potential returns per unit of risk. SoftBank Group Corp is currently generating about -0.05 per unit of risk. If you would invest  4,066  in Baker Hughes Co on December 29, 2024 and sell it today you would earn a total of  243.00  from holding Baker Hughes Co or generate 5.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	69.23%
Values	Daily Returns

Baker Hughes Co  vs.  SoftBank Group Corp

Baker Hughes

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Baker Hughes Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Baker Hughes may actually be approaching a critical reversion point that can send shares even higher in April 2025.

SoftBank Group Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days SoftBank Group Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Baker Hughes and SoftBank Group

The main advantage of trading using opposite Baker Hughes and SoftBank Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baker Hughes position performs unexpectedly, SoftBank 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 SoftBank Group will offset losses from the drop in SoftBank Group's long position.

The idea behind Baker Hughes Co and SoftBank Group Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.