Correlation Between BHP and Grupo Profuturo

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

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

Diversification Opportunities for BHP and Grupo Profuturo

-0.05

Correlation Coefficient

BHP  Grupo Profuturo

Good diversification

The 3 months correlation between BHP and Grupo is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group and Grupo Profuturo SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Profuturo SAB and BHP 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 are associated (or correlated) with Grupo Profuturo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Profuturo SAB has no effect on the direction of BHP i.e., BHP and Grupo Profuturo go up and down completely randomly.

Pair Corralation between BHP and Grupo Profuturo

If you would invest  9,300  in Grupo Profuturo SAB on September 27, 2024 and sell it today you would earn a total of  700.00  from holding Grupo Profuturo SAB or generate 7.53% return on investment over 90 days.

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

BHP Group  vs.  Grupo Profuturo SAB

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.

Grupo Profuturo SAB

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Profuturo SAB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Grupo Profuturo is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with BHP and Grupo Profuturo

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

The idea behind BHP Group and Grupo Profuturo SAB 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.