Correlation Between Compaa Minera and BHP

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

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

Diversification Opportunities for Compaa Minera and BHP

0.21

Correlation Coefficient

Compaa Minera  BHP

Modest diversification

The 3 months correlation between Compaa and BHP is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Compaa Minera Autln and BHP Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BHP Group and Compaa Minera 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 Compaa Minera Autln are associated (or correlated) with BHP. 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 has no effect on the direction of Compaa Minera i.e., Compaa Minera and BHP go up and down completely randomly.

Pair Corralation between Compaa Minera and BHP

Assuming the 90 days trading horizon Compaa Minera Autln is expected to under-perform the BHP. In addition to that, Compaa Minera is 1.41 times more volatile than BHP Group. It trades about -0.08 of its total potential returns per unit of risk. BHP Group is currently generating about 0.01 per unit of volatility. If you would invest  112,929  in BHP Group on October 12, 2024 and sell it today you would earn a total of  991.00  from holding BHP Group or generate 0.88% return on investment over 90 days.

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

Compaa Minera Autln  vs.  BHP Group

Compaa Minera Autln

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compaa Minera Autln has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

BHP Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BHP Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, BHP is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Compaa Minera and BHP

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

The idea behind Compaa Minera Autln and BHP Group 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.

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 Global Correlations module to find global opportunities by holding instruments from different markets.