Correlation Between Regal Investment and BHP Group

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

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

Diversification Opportunities for Regal Investment and BHP Group

0.0

Correlation Coefficient

Regal Investment  BHP Group

Pay attention - limited upside

The 3 months correlation between Regal and BHP is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Regal Investment and BHP Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BHP Group Limited and Regal Investment 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 Regal Investment are associated (or correlated) with BHP Group. 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 Limited has no effect on the direction of Regal Investment i.e., Regal Investment and BHP Group go up and down completely randomly.

Pair Corralation between Regal Investment and BHP Group

Assuming the 90 days trading horizon Regal Investment is expected to under-perform the BHP Group. In addition to that, Regal Investment is 1.05 times more volatile than BHP Group Limited. It trades about -0.22 of its total potential returns per unit of risk. BHP Group Limited is currently generating about -0.04 per unit of volatility. If you would invest  4,008  in BHP Group Limited on September 21, 2024 and sell it today you would lose (40.00) from holding BHP Group Limited or give up 1.0% of portfolio value over 90 days.

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

Regal Investment  vs.  BHP Group Limited

Regal Investment

Risk-Adjusted Performance

5 of 100

Modest

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

BHP Group Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BHP Group Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, BHP Group is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Regal Investment and BHP Group

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

The idea behind Regal Investment and BHP Group Limited 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.