Correlation Between Hochschild Mining and LG Electronics
Can any of the company-specific risk be diversified away by investing in both Hochschild Mining and LG Electronics 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 LG Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hochschild Mining plc and LG Electronics, you can compare the effects of market volatilities on Hochschild Mining and LG Electronics 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 LG Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hochschild Mining and LG Electronics.
Diversification Opportunities for Hochschild Mining and LG Electronics
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hochschild and LGLG is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Hochschild Mining plc and LG Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Electronics 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 plc are associated (or correlated) with LG Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Electronics has no effect on the direction of Hochschild Mining i.e., Hochschild Mining and LG Electronics go up and down completely randomly.
Pair Corralation between Hochschild Mining and LG Electronics
Assuming the 90 days horizon Hochschild Mining plc is expected to under-perform the LG Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Hochschild Mining plc is 1.58 times less risky than LG Electronics. The stock trades about -0.24 of its potential returns per unit of risk. The LG Electronics is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 1,410 in LG Electronics on October 12, 2024 and sell it today you would lose (110.00) from holding LG Electronics or give up 7.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hochschild Mining plc vs. LG Electronics
Performance |
| Timeline |
| Hochschild Mining plc |
| LG Electronics |
Hochschild Mining and LG Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hochschild Mining and LG Electronics
The main advantage of trading using opposite Hochschild Mining and LG Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hochschild Mining position performs unexpectedly, LG Electronics 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 LG Electronics will offset losses from the drop in LG Electronics' long position.| Hochschild Mining vs. Ribbon Communications | Hochschild Mining vs. T MOBILE INCDL 00001 | Hochschild Mining vs. Commonwealth Bank of | Hochschild Mining vs. CVB Financial Corp |
| LG Electronics vs. GRUPO CARSO A1 | LG Electronics vs. Commercial Vehicle Group | LG Electronics vs. Hochschild Mining plc | LG Electronics vs. CONTAGIOUS GAMING INC |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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