Correlation Between Impulsora Del and BHP

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

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

Diversification Opportunities for Impulsora Del and BHP

0.71

Correlation Coefficient

Impulsora Del  BHP

Poor diversification

The 3 months correlation between Impulsora and BHP is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Impulsora del Desarrollo and BHP Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BHP Group and Impulsora Del 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 Impulsora del Desarrollo 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 Impulsora Del i.e., Impulsora Del and BHP go up and down completely randomly.

Pair Corralation between Impulsora Del and BHP

Assuming the 90 days trading horizon Impulsora Del is expected to generate 4.57 times less return on investment than BHP. But when comparing it to its historical volatility, Impulsora del Desarrollo is 4.29 times less risky than BHP. It trades about 0.05 of its potential returns per unit of risk. BHP Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  94,911  in BHP Group on September 28, 2024 and sell it today you would earn a total of  19,009  from holding BHP Group or generate 20.03% return on investment over 90 days.

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

Impulsora del Desarrollo  vs.  BHP Group

Impulsora del Desarrollo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Impulsora del Desarrollo has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Impulsora Del is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 Impulsora Del and BHP

The main advantage of trading using opposite Impulsora Del and BHP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Impulsora Del 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 Impulsora del Desarrollo 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.