Correlation Between Fortescue Metals and Hochschild Mining
Can any of the company-specific risk be diversified away by investing in both Fortescue Metals 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 Fortescue Metals and Hochschild Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortescue Metals Group and Hochschild Mining plc, you can compare the effects of market volatilities on Fortescue Metals 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 Fortescue Metals with a short position of Hochschild Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortescue Metals and Hochschild Mining.
Diversification Opportunities for Fortescue Metals and Hochschild Mining
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Fortescue and Hochschild is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Fortescue Metals Group 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 Fortescue Metals 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 Fortescue Metals Group 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 Fortescue Metals i.e., Fortescue Metals and Hochschild Mining go up and down completely randomly.
Pair Corralation between Fortescue Metals and Hochschild Mining
Assuming the 90 days horizon Fortescue Metals is expected to generate 1.2 times less return on investment than Hochschild Mining. But when comparing it to its historical volatility, Fortescue Metals Group is 1.82 times less risky than Hochschild Mining. It trades about 0.19 of its potential returns per unit of risk. Hochschild Mining plc is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 256.00 in Hochschild Mining plc on October 24, 2024 and sell it today you would earn a total of 15.00 from holding Hochschild Mining plc or generate 5.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortescue Metals Group vs. Hochschild Mining plc
Performance |
| Timeline |
| Fortescue Metals |
| Hochschild Mining plc |
Fortescue Metals and Hochschild Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortescue Metals and Hochschild Mining
The main advantage of trading using opposite Fortescue Metals and Hochschild Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortescue Metals 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.| Fortescue Metals vs. Casio Computer CoLtd | Fortescue Metals vs. China Communications Services | Fortescue Metals vs. Tradeweb Markets | Fortescue Metals vs. H2O Retailing |
| Hochschild Mining vs. Fortescue Metals Group | Hochschild Mining vs. PLAY2CHILL SA ZY | Hochschild Mining vs. FIREWEED METALS P | Hochschild Mining vs. Aluminum of |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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