Correlation Between BHPA and Peer To

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

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

Diversification Opportunities for BHPA and Peer To

0.3

Correlation Coefficient

BHPA  Peer To

Weak diversification

The 3 months correlation between BHPA and Peer is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding BHPA Inc and Peer To Peer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peer To Peer 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 Peer To. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peer To Peer has no effect on the direction of BHPA i.e., BHPA and Peer To go up and down completely randomly.

Pair Corralation between BHPA and Peer To

Given the investment horizon of 90 days BHPA is expected to generate 8.51 times less return on investment than Peer To. But when comparing it to its historical volatility, BHPA Inc is 2.61 times less risky than Peer To. It trades about 0.04 of its potential returns per unit of risk. Peer To Peer is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.03  in Peer To Peer on September 2, 2024 and sell it today you would earn a total of  0.00  from holding Peer To Peer or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

BHPA Inc  vs.  Peer To Peer

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 abnormal basic indicators, BHPA sustained solid returns over the last few months and may actually be approaching a breakup point.

Peer To Peer

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Peer To Peer are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Peer To reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BHPA and Peer To

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

The idea behind BHPA Inc and Peer To Peer 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.