Correlation Between Astra Veda and BHPA

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

By analyzing existing cross correlation between Astra Veda and BHPA Inc, you can compare the effects of market volatilities on Astra Veda and BHPA 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 Astra Veda with a short position of BHPA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astra Veda and BHPA.

Diversification Opportunities for Astra Veda and BHPA

-0.41

Correlation Coefficient

Astra Veda  BHPA

Very good diversification

The 3 months correlation between Astra and BHPA is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Astra Veda and BHPA Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BHPA Inc and Astra Veda 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 Astra Veda are associated (or correlated) with BHPA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BHPA Inc has no effect on the direction of Astra Veda i.e., Astra Veda and BHPA go up and down completely randomly.

Pair Corralation between Astra Veda and BHPA

Given the investment horizon of 90 days Astra Veda is expected to generate 2.18 times more return on investment than BHPA. However, Astra Veda is 2.18 times more volatile than BHPA Inc. It trades about 0.12 of its potential returns per unit of risk. BHPA Inc is currently generating about 0.07 per unit of risk. If you would invest  0.03  in Astra Veda on December 27, 2024 and sell it today you would lose (0.01) from holding Astra Veda or give up 33.33% of portfolio value over 90 days.

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

Astra Veda  vs.  BHPA Inc

Astra Veda

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Astra Veda are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Astra Veda sustained solid returns over the last few months and may actually be approaching a breakup point.

BHPA Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BHPA Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, BHPA sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Astra Veda and BHPA

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

The idea behind Astra Veda and BHPA Inc 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 Commodity Directory module to find actively traded commodities issued by global exchanges.