Correlation Between Grupo Gigante and BHP

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

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

Diversification Opportunities for Grupo Gigante and BHP

0.62

Correlation Coefficient

Grupo Gigante  BHP

Poor diversification

The 3 months correlation between Grupo and BHP is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Gigante S and BHP Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BHP Group and Grupo Gigante 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 Grupo Gigante S 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 Grupo Gigante i.e., Grupo Gigante and BHP go up and down completely randomly.

Pair Corralation between Grupo Gigante and BHP

If you would invest  2,800  in Grupo Gigante S on September 23, 2024 and sell it today you would earn a total of  0.00  from holding Grupo Gigante S 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

Grupo Gigante S  vs.  BHP Group

Grupo Gigante S

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Gigante S are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Grupo Gigante exhibited solid returns over the last few months and may actually be approaching a breakup point.

BHP Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BHP Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, BHP may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Grupo Gigante and BHP

The main advantage of trading using opposite Grupo Gigante and BHP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Gigante 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 Grupo Gigante S 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.