Correlation Between Volvo AB and Hochschild Mining
Can any of the company-specific risk be diversified away by investing in both Volvo AB and Hochschild Mining 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 Volvo AB and Hochschild Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volvo AB Series and Hochschild Mining plc, you can compare the effects of market volatilities on Volvo AB and Hochschild Mining 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 Volvo AB with a short position of Hochschild Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volvo AB and Hochschild Mining.
Diversification Opportunities for Volvo AB and Hochschild Mining
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Volvo and Hochschild is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Volvo AB Series and Hochschild Mining plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hochschild Mining plc and Volvo AB 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 Volvo AB Series are associated (or correlated) with Hochschild Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hochschild Mining plc has no effect on the direction of Volvo AB i.e., Volvo AB and Hochschild Mining go up and down completely randomly.
Pair Corralation between Volvo AB and Hochschild Mining
Assuming the 90 days trading horizon Volvo AB is expected to generate 7.05 times less return on investment than Hochschild Mining. But when comparing it to its historical volatility, Volvo AB Series is 2.04 times less risky than Hochschild Mining. It trades about 0.04 of its potential returns per unit of risk. Hochschild Mining plc is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 10,180 in Hochschild Mining plc on September 14, 2024 and sell it today you would earn a total of 12,420 from holding Hochschild Mining plc or generate 122.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Volvo AB Series vs. Hochschild Mining plc
Performance |
| Timeline |
| Volvo AB Series |
| Hochschild Mining plc |
Volvo AB and Hochschild Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volvo AB and Hochschild Mining
The main advantage of trading using opposite Volvo AB and Hochschild Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volvo AB position performs unexpectedly, Hochschild Mining 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 Hochschild Mining will offset losses from the drop in Hochschild Mining's long position.| Volvo AB vs. Air Products Chemicals | Volvo AB vs. Porvair plc | Volvo AB vs. bet at home AG | Volvo AB vs. Flow Traders NV |
| Hochschild Mining vs. Sunny Optical Technology | Hochschild Mining vs. Symphony Environmental Technologies | Hochschild Mining vs. Solstad Offshore ASA | Hochschild Mining vs. Ironveld Plc |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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