Correlation Between Mdica Sur and BHP

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

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

Diversification Opportunities for Mdica Sur and BHP

-0.67

Correlation Coefficient

Mdica Sur  BHP

Excellent diversification

The 3 months correlation between Mdica and BHP is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Mdica Sur SAB and BHP Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BHP Group and Mdica Sur 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 Mdica Sur SAB 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 Mdica Sur i.e., Mdica Sur and BHP go up and down completely randomly.

Pair Corralation between Mdica Sur and BHP

Assuming the 90 days trading horizon Mdica Sur SAB is expected to generate 0.88 times more return on investment than BHP. However, Mdica Sur SAB is 1.14 times less risky than BHP. It trades about 0.04 of its potential returns per unit of risk. BHP Group is currently generating about -0.12 per unit of risk. If you would invest  3,423  in Mdica Sur SAB on December 30, 2024 and sell it today you would earn a total of  76.00  from holding Mdica Sur SAB or generate 2.22% return on investment over 90 days.

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

Mdica Sur SAB  vs.  BHP Group

Mdica Sur SAB

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mdica Sur SAB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, Mdica Sur 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

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Mdica Sur and BHP

The main advantage of trading using opposite Mdica Sur and BHP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mdica Sur 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 Mdica Sur SAB 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.