Correlation Between First Majestic and Hochschild Mining
Can any of the company-specific risk be diversified away by investing in both First Majestic 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 First Majestic and Hochschild Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Majestic Silver and Hochschild Mining plc, you can compare the effects of market volatilities on First Majestic 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 First Majestic with a short position of Hochschild Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Hochschild Mining.
Diversification Opportunities for First Majestic and Hochschild Mining
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Hochschild is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver 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 First Majestic 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 First Majestic Silver 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 First Majestic i.e., First Majestic and Hochschild Mining go up and down completely randomly.
Pair Corralation between First Majestic and Hochschild Mining
Assuming the 90 days trading horizon First Majestic Silver is expected to generate 1.64 times more return on investment than Hochschild Mining. However, First Majestic is 1.64 times more volatile than Hochschild Mining plc. It trades about 0.13 of its potential returns per unit of risk. Hochschild Mining plc is currently generating about 0.18 per unit of risk. If you would invest 796.00 in First Majestic Silver on October 24, 2024 and sell it today you would earn a total of 65.00 from holding First Majestic Silver or generate 8.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Majestic Silver vs. Hochschild Mining plc
Performance |
| Timeline |
| First Majestic Silver |
| Hochschild Mining plc |
First Majestic and Hochschild Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and Hochschild Mining
The main advantage of trading using opposite First Majestic and Hochschild Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic 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.| First Majestic vs. LBG Media PLC | First Majestic vs. Aeorema Communications Plc | First Majestic vs. Cairo Communication SpA | First Majestic vs. Zinc Media Group |
| Hochschild Mining vs. Givaudan SA | Hochschild Mining vs. Antofagasta PLC | Hochschild Mining vs. Ferrexpo PLC | Hochschild Mining vs. Atalaya Mining |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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