Correlation Between BHPA and Astra Veda

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

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

Diversification Opportunities for BHPA and Astra Veda

-0.19

Correlation Coefficient

BHPA  Astra Veda

Good diversification

The 3 months correlation between BHPA and Astra is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding BHPA Inc and Astra Veda in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astra Veda and BHPA 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 BHPA Inc are associated (or correlated) with Astra Veda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astra Veda has no effect on the direction of BHPA i.e., BHPA and Astra Veda go up and down completely randomly.

Pair Corralation between BHPA and Astra Veda

Given the investment horizon of 90 days BHPA Inc is expected to generate 0.71 times more return on investment than Astra Veda. However, BHPA Inc is 1.41 times less risky than Astra Veda. It trades about 0.08 of its potential returns per unit of risk. Astra Veda is currently generating about -0.04 per unit of risk. If you would invest  0.40  in BHPA Inc on September 4, 2024 and sell it today you would earn a total of  0.10  from holding BHPA Inc or generate 25.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

BHPA Inc  vs.  Astra Veda

BHPA Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BHPA Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, BHPA sustained solid returns over the last few months and may actually be approaching a breakup point.

Astra Veda

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with BHPA and Astra Veda

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

The idea behind BHPA Inc and Astra Veda 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.