Correlation Between Comtech Telecommunicatio and BHP Group

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

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

Diversification Opportunities for Comtech Telecommunicatio and BHP Group

0.43

Correlation Coefficient

Comtech Telecommunicatio BHP Group

Very weak diversification

The 3 months correlation between Comtech and BHPLF is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Comtech Telecommunications Cor 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 Comtech Telecommunicatio 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 Comtech Telecommunications Corp 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 Comtech Telecommunicatio i.e., Comtech Telecommunicatio and BHP Group go up and down completely randomly.

Pair Corralation between Comtech Telecommunicatio and BHP Group

Given the investment horizon of 90 days Comtech Telecommunications Corp is expected to under-perform the BHP Group. In addition to that, Comtech Telecommunicatio is 2.15 times more volatile than BHP Group Limited. It trades about -0.25 of its total potential returns per unit of risk. BHP Group Limited is currently generating about 0.08 per unit of volatility. If you would invest  3,118  in BHP Group Limited on January 1, 2023 and sell it today you would earn a total of  106.00  from holding BHP Group Limited or generate 3.4% return on investment over 90 days.

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

Comtech Telecommunications Cor  vs.  BHP Group Limited

Comtech Telecommunicatio

Comtech Performance

2 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in Comtech Telecommunications Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Comtech Telecommunicatio is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

BHP Group Limited

BHPLF Performance

5 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in BHP Group Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, BHP Group may actually be approaching a critical reversion point that can send shares even higher in May 2023.

Pair Trading with Comtech Telecommunicatio and BHP Group

The main advantage of trading using opposite Comtech Telecommunicatio and BHP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Comtech Telecommunicatio 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.

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The idea behind Comtech Telecommunications Corp 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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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..