Correlation Between GoldMining and Hochschild Mining
Can any of the company-specific risk be diversified away by investing in both GoldMining 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 GoldMining and Hochschild Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GoldMining and Hochschild Mining plc, you can compare the effects of market volatilities on GoldMining 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 GoldMining with a short position of Hochschild Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of GoldMining and Hochschild Mining.
Diversification Opportunities for GoldMining and Hochschild Mining
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GoldMining and Hochschild is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding GoldMining 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 GoldMining 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 GoldMining 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 GoldMining i.e., GoldMining and Hochschild Mining go up and down completely randomly.
Pair Corralation between GoldMining and Hochschild Mining
Assuming the 90 days trading horizon GoldMining is expected to under-perform the Hochschild Mining. In addition to that, GoldMining is 1.22 times more volatile than Hochschild Mining plc. It trades about -0.15 of its total potential returns per unit of risk. Hochschild Mining plc is currently generating about -0.12 per unit of volatility. If you would invest 23,100 in Hochschild Mining plc on August 31, 2024 and sell it today you would lose (1,750) from holding Hochschild Mining plc or give up 7.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 59.09% |
| Values | Daily Returns |
GoldMining vs. Hochschild Mining plc
Performance |
| Timeline |
| GoldMining |
| Hochschild Mining plc |
GoldMining and Hochschild Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GoldMining and Hochschild Mining
The main advantage of trading using opposite GoldMining and Hochschild Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GoldMining 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.| GoldMining vs. New Residential Investment | GoldMining vs. The Mercantile Investment | GoldMining vs. FC Investment Trust | GoldMining vs. Compal Electronics GDR |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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