Correlation Between COAST ENTERTAINMENT and BHP Group

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

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

Diversification Opportunities for COAST ENTERTAINMENT and BHP Group

-0.14

Correlation Coefficient

COAST ENTERTAINMENT  BHP Group

Good diversification

The 3 months correlation between COAST and BHP is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding COAST ENTERTAINMENT HOLDINGS 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 COAST ENTERTAINMENT 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 COAST ENTERTAINMENT HOLDINGS 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 COAST ENTERTAINMENT i.e., COAST ENTERTAINMENT and BHP Group go up and down completely randomly.

Pair Corralation between COAST ENTERTAINMENT and BHP Group

Assuming the 90 days trading horizon COAST ENTERTAINMENT HOLDINGS is expected to generate 2.9 times more return on investment than BHP Group. However, COAST ENTERTAINMENT is 2.9 times more volatile than BHP Group Limited. It trades about 0.21 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  44.00  in COAST ENTERTAINMENT HOLDINGS on September 28, 2024 and sell it today you would earn a total of  6.00  from holding COAST ENTERTAINMENT HOLDINGS or generate 13.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

COAST ENTERTAINMENT HOLDINGS  vs.  BHP Group Limited

COAST ENTERTAINMENT

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in COAST ENTERTAINMENT HOLDINGS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical indicators, COAST ENTERTAINMENT may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 COAST ENTERTAINMENT and BHP Group

The main advantage of trading using opposite COAST ENTERTAINMENT and BHP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COAST ENTERTAINMENT 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 COAST ENTERTAINMENT HOLDINGS 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.