Correlation Between FibraHotel and BHP

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

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

Diversification Opportunities for FibraHotel and BHP

-0.19

Correlation Coefficient

FibraHotel  BHP

Good diversification

The 3 months correlation between FibraHotel and BHP is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding FibraHotel and BHP Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BHP Group and FibraHotel 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 FibraHotel are associated (or correlated) with BHP. 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 has no effect on the direction of FibraHotel i.e., FibraHotel and BHP go up and down completely randomly.

Pair Corralation between FibraHotel and BHP

If you would invest  782.00  in FibraHotel on October 22, 2024 and sell it today you would earn a total of  187.00  from holding FibraHotel or generate 23.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

FibraHotel  vs.  BHP Group

FibraHotel

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FibraHotel are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical indicators, FibraHotel sustained solid returns over the last few months and may actually be approaching a breakup point.

BHP Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BHP Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, BHP is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with FibraHotel and BHP

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

The idea behind FibraHotel and BHP Group 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..