Correlation Between BHP and Clean Seas

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

By analyzing existing cross correlation between BHP Group and Clean Seas Seafood, you can compare the effects of market volatilities on BHP and Clean Seas 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 Clean Seas. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP and Clean Seas.

Diversification Opportunities for BHP and Clean Seas

0.35

Correlation Coefficient

BHP  Clean Seas

Weak diversification

The 3 months correlation between BHP and Clean is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group and Clean Seas Seafood in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clean Seas Seafood 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 Clean Seas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clean Seas Seafood has no effect on the direction of BHP i.e., BHP and Clean Seas go up and down completely randomly.

Pair Corralation between BHP and Clean Seas

If you would invest  14.00  in Clean Seas Seafood on April 3, 2025 and sell it today you would earn a total of  0.00  from holding Clean Seas Seafood or generate 0.0% return on investment over 90 days.

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

BHP Group  vs.  Clean Seas Seafood

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 comparatively stable basic indicators, BHP is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Clean Seas Seafood

Risk-Adjusted Performance

Very Weak

Over the last 90 days Clean Seas Seafood has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Clean Seas 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 BHP and Clean Seas

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

The idea behind BHP Group and Clean Seas Seafood 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.