Correlation Between HOCHSCHILD MINING and Anglo American
Can any of the company-specific risk be diversified away by investing in both HOCHSCHILD MINING and Anglo American 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 HOCHSCHILD MINING and Anglo American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HOCHSCHILD MINING and Anglo American plc, you can compare the effects of market volatilities on HOCHSCHILD MINING and Anglo American 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 HOCHSCHILD MINING with a short position of Anglo American. Check out your portfolio center. Please also check ongoing floating volatility patterns of HOCHSCHILD MINING and Anglo American.
Diversification Opportunities for HOCHSCHILD MINING and Anglo American
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HOCHSCHILD and Anglo is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding HOCHSCHILD MINING and Anglo American plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anglo American plc and HOCHSCHILD MINING 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 HOCHSCHILD MINING are associated (or correlated) with Anglo American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anglo American plc has no effect on the direction of HOCHSCHILD MINING i.e., HOCHSCHILD MINING and Anglo American go up and down completely randomly.
Pair Corralation between HOCHSCHILD MINING and Anglo American
Assuming the 90 days trading horizon HOCHSCHILD MINING is expected to under-perform the Anglo American. In addition to that, HOCHSCHILD MINING is 1.37 times more volatile than Anglo American plc. It trades about -0.03 of its total potential returns per unit of risk. Anglo American plc is currently generating about 0.1 per unit of volatility. If you would invest 2,890 in Anglo American plc on September 5, 2024 and sell it today you would earn a total of 134.00 from holding Anglo American plc or generate 4.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
HOCHSCHILD MINING vs. Anglo American plc
Performance |
| Timeline |
| HOCHSCHILD MINING |
| Anglo American plc |
HOCHSCHILD MINING and Anglo American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HOCHSCHILD MINING and Anglo American
The main advantage of trading using opposite HOCHSCHILD MINING and Anglo American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HOCHSCHILD MINING position performs unexpectedly, Anglo American 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 Anglo American will offset losses from the drop in Anglo American's long position.| HOCHSCHILD MINING vs. TOTAL GABON | HOCHSCHILD MINING vs. Walgreens Boots Alliance | HOCHSCHILD MINING vs. Peak Resources Limited |
| Anglo American vs. QINGCI GAMES INC | Anglo American vs. STMicroelectronics NV | Anglo American vs. HOCHSCHILD MINING | Anglo American vs. Penn National Gaming |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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