Correlation Between Event Hospitality and BHP Group

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

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

Diversification Opportunities for Event Hospitality and BHP Group

-0.71

Correlation Coefficient

Event Hospitality  BHP Group

Pay attention - limited upside

The 3 months correlation between Event and BHP is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Event Hospitality and 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 Event Hospitality 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 Event Hospitality and 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 Event Hospitality i.e., Event Hospitality and BHP Group go up and down completely randomly.

Pair Corralation between Event Hospitality and BHP Group

Assuming the 90 days trading horizon Event Hospitality and is expected to under-perform the BHP Group. In addition to that, Event Hospitality is 1.21 times more volatile than BHP Group Limited. It trades about -0.14 of its total potential returns per unit of risk. BHP Group Limited is currently generating about -0.1 per unit of volatility. If you would invest  4,059  in BHP Group Limited on October 8, 2024 and sell it today you would lose (83.00) from holding BHP Group Limited or give up 2.04% of portfolio value over 90 days.

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

Event Hospitality and  vs.  BHP Group Limited

Event Hospitality

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Event Hospitality and are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Event Hospitality may actually be approaching a critical reversion point that can send shares even higher in February 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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Event Hospitality and BHP Group

The main advantage of trading using opposite Event Hospitality and BHP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Event Hospitality 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 Event Hospitality and 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.