Correlation Between Hochschild Mining and Dolly Varden
Can any of the company-specific risk be diversified away by investing in both Hochschild Mining and Dolly Varden 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 Dolly Varden 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 Dolly Varden Silver, you can compare the effects of market volatilities on Hochschild Mining and Dolly Varden 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 Dolly Varden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hochschild Mining and Dolly Varden.
Diversification Opportunities for Hochschild Mining and Dolly Varden
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hochschild and Dolly is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Hochschild Mining plc and Dolly Varden Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dolly Varden Silver 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 Dolly Varden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dolly Varden Silver has no effect on the direction of Hochschild Mining i.e., Hochschild Mining and Dolly Varden go up and down completely randomly.
Pair Corralation between Hochschild Mining and Dolly Varden
Assuming the 90 days trading horizon Hochschild Mining is expected to generate 1.5 times less return on investment than Dolly Varden. But when comparing it to its historical volatility, Hochschild Mining plc is 1.99 times less risky than Dolly Varden. It trades about 0.1 of its potential returns per unit of risk. Dolly Varden Silver is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 81.00 in Dolly Varden Silver on August 31, 2024 and sell it today you would earn a total of 28.00 from holding Dolly Varden Silver or generate 34.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 29.37% |
| Values | Daily Returns |
Hochschild Mining plc vs. Dolly Varden Silver
Performance |
| Timeline |
| Hochschild Mining plc |
| Dolly Varden Silver |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
Hochschild Mining and Dolly Varden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hochschild Mining and Dolly Varden
The main advantage of trading using opposite Hochschild Mining and Dolly Varden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hochschild Mining position performs unexpectedly, Dolly Varden 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 Dolly Varden will offset losses from the drop in Dolly Varden's long position.The idea behind Hochschild Mining plc and Dolly Varden Silver 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.| Dolly Varden vs. Neometals | Dolly Varden vs. Coor Service Management | Dolly Varden vs. Aeorema Communications Plc | Dolly Varden vs. JLEN Environmental Assets |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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