Correlation Between Astoria Investments and BHP Group

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

By analyzing existing cross correlation between Astoria Investments and BHP Group Limited, you can compare the effects of market volatilities on Astoria Investments 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 Astoria Investments with a short position of BHP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astoria Investments and BHP Group.

Diversification Opportunities for Astoria Investments and BHP Group

-0.34

Correlation Coefficient

Astoria Investments  BHP Group

Very good diversification

The 3 months correlation between Astoria and BHP is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Astoria Investments 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 Astoria Investments 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 Astoria Investments 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 Astoria Investments i.e., Astoria Investments and BHP Group go up and down completely randomly.

Pair Corralation between Astoria Investments and BHP Group

Assuming the 90 days trading horizon Astoria Investments is expected to generate 1.47 times more return on investment than BHP Group. However, Astoria Investments is 1.47 times more volatile than BHP Group Limited. It trades about -0.01 of its potential returns per unit of risk. BHP Group Limited is currently generating about -0.12 per unit of risk. If you would invest  86,500  in Astoria Investments on October 25, 2024 and sell it today you would lose (1,500) from holding Astoria Investments or give up 1.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Astoria Investments  vs.  BHP Group Limited

Astoria Investments

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Astoria Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Astoria Investments is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

BHP Group Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BHP Group Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Astoria Investments and BHP Group

The main advantage of trading using opposite Astoria Investments and BHP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astoria Investments 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.

The idea behind Astoria Investments and BHP Group Limited 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.