Correlation Between BHP Group and Ainsworth Game

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

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

Diversification Opportunities for BHP Group and Ainsworth Game

0.38

Correlation Coefficient

BHP Group  Ainsworth Game

Weak diversification

The 3 months correlation between BHP and Ainsworth is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and Ainsworth Game Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ainsworth Game Technology and BHP Group 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 BHP Group Limited are associated (or correlated) with Ainsworth Game. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ainsworth Game Technology has no effect on the direction of BHP Group i.e., BHP Group and Ainsworth Game go up and down completely randomly.

Pair Corralation between BHP Group and Ainsworth Game

Assuming the 90 days trading horizon BHP Group Limited is expected to generate 0.51 times more return on investment than Ainsworth Game. However, BHP Group Limited is 1.96 times less risky than Ainsworth Game. It trades about 0.09 of its potential returns per unit of risk. Ainsworth Game Technology is currently generating about -0.04 per unit of risk. If you would invest  3,881  in BHP Group Limited on September 12, 2024 and sell it today you would earn a total of  319.00  from holding BHP Group Limited or generate 8.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

BHP Group Limited  vs.  Ainsworth Game Technology

BHP Group Limited

Risk-Adjusted Performance

7 of 100

Modest

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

Ainsworth Game Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ainsworth Game Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's forward 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 BHP Group and Ainsworth Game

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

The idea behind BHP Group Limited and Ainsworth Game Technology 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.

Check out your portfolio center.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.