Correlation Between Hochschild Mining and Solstad Offshore
Can any of the company-specific risk be diversified away by investing in both Hochschild Mining and Solstad Offshore 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 Solstad Offshore 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 Solstad Offshore ASA, you can compare the effects of market volatilities on Hochschild Mining and Solstad Offshore 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 Solstad Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hochschild Mining and Solstad Offshore.
Diversification Opportunities for Hochschild Mining and Solstad Offshore
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hochschild and Solstad is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Hochschild Mining plc and Solstad Offshore ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solstad Offshore ASA 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 Solstad Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solstad Offshore ASA has no effect on the direction of Hochschild Mining i.e., Hochschild Mining and Solstad Offshore go up and down completely randomly.
Pair Corralation between Hochschild Mining and Solstad Offshore
Assuming the 90 days trading horizon Hochschild Mining plc is expected to generate 0.76 times more return on investment than Solstad Offshore. However, Hochschild Mining plc is 1.31 times less risky than Solstad Offshore. It trades about 0.11 of its potential returns per unit of risk. Solstad Offshore ASA is currently generating about 0.08 per unit of risk. If you would invest 8,530 in Hochschild Mining plc on August 29, 2024 and sell it today you would earn a total of 12,720 from holding Hochschild Mining plc or generate 149.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.37% |
| Values | Daily Returns |
Hochschild Mining plc vs. Solstad Offshore ASA
Performance |
| Timeline |
| Hochschild Mining plc |
| Solstad Offshore ASA |
Hochschild Mining and Solstad Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hochschild Mining and Solstad Offshore
The main advantage of trading using opposite Hochschild Mining and Solstad Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hochschild Mining position performs unexpectedly, Solstad Offshore 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 Solstad Offshore will offset losses from the drop in Solstad Offshore's long position.The idea behind Hochschild Mining plc and Solstad Offshore ASA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Solstad Offshore vs. Lendinvest PLC | Solstad Offshore vs. Neometals | Solstad Offshore vs. Albion Technology General | Solstad Offshore vs. Jupiter Fund Management |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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