Correlation Between BHP Group and Tartisan Nickel

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

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

Diversification Opportunities for BHP Group and Tartisan Nickel

0.66

Correlation Coefficient

BHP Group  Tartisan Nickel

Poor diversification

The 3 months correlation between BHP and Tartisan is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and Tartisan Nickel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tartisan Nickel Corp and BHP Group 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 BHP Group Limited are associated (or correlated) with Tartisan Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tartisan Nickel Corp has no effect on the direction of BHP Group i.e., BHP Group and Tartisan Nickel go up and down completely randomly.

Pair Corralation between BHP Group and Tartisan Nickel

Assuming the 90 days horizon BHP Group Limited is expected to under-perform the Tartisan Nickel. In addition to that, BHP Group is 1.18 times more volatile than Tartisan Nickel Corp. It trades about -0.02 of its total potential returns per unit of risk. Tartisan Nickel Corp is currently generating about 0.02 per unit of volatility. If you would invest  14.00  in Tartisan Nickel Corp on September 1, 2024 and sell it today you would earn a total of  0.00  from holding Tartisan Nickel Corp or generate 0.0% return on investment over 90 days.

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

BHP Group Limited  vs.  Tartisan Nickel Corp

BHP Group Limited

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BHP Group Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, BHP Group reported solid returns over the last few months and may actually be approaching a breakup point.

Tartisan Nickel Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tartisan Nickel Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Tartisan Nickel reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BHP Group and Tartisan Nickel

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

The idea behind BHP Group Limited and Tartisan Nickel Corp 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.