Correlation Between Cardno and BHP Group

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

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

Diversification Opportunities for Cardno and BHP Group

0.52

Correlation Coefficient

Cardno  BHP Group

Very weak diversification

The 3 months correlation between Cardno and BHP is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Cardno and BHP Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BHP Group Limited and Cardno 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 Cardno are associated (or correlated) with BHP Group. 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 Limited has no effect on the direction of Cardno i.e., Cardno and BHP Group go up and down completely randomly.

Pair Corralation between Cardno and BHP Group

Assuming the 90 days trading horizon Cardno is expected to generate 8.16 times more return on investment than BHP Group. However, Cardno is 8.16 times more volatile than BHP Group Limited. It trades about 0.09 of its potential returns per unit of risk. BHP Group Limited is currently generating about 0.0 per unit of risk. If you would invest  21.00  in Cardno on September 28, 2024 and sell it today you would earn a total of  2.00  from holding Cardno or generate 9.52% return on investment over 90 days.

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

Cardno  vs.  BHP Group Limited

Cardno

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cardno has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

BHP Group Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BHP Group Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Cardno and BHP Group

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

The idea behind Cardno and BHP Group Limited 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.