Correlation Between Hochschild Mining and Balfour Beatty
Can any of the company-specific risk be diversified away by investing in both Hochschild Mining and Balfour Beatty 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 Balfour Beatty 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 Balfour Beatty plc, you can compare the effects of market volatilities on Hochschild Mining and Balfour Beatty 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 Balfour Beatty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hochschild Mining and Balfour Beatty.
Diversification Opportunities for Hochschild Mining and Balfour Beatty
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hochschild and Balfour is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Hochschild Mining plc and Balfour Beatty plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balfour Beatty 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 plc are associated (or correlated) with Balfour Beatty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balfour Beatty plc has no effect on the direction of Hochschild Mining i.e., Hochschild Mining and Balfour Beatty go up and down completely randomly.
Pair Corralation between Hochschild Mining and Balfour Beatty
Assuming the 90 days trading horizon Hochschild Mining plc is expected to generate 2.86 times more return on investment than Balfour Beatty. However, Hochschild Mining is 2.86 times more volatile than Balfour Beatty plc. It trades about 0.09 of its potential returns per unit of risk. Balfour Beatty plc is currently generating about 0.22 per unit of risk. If you would invest 21,450 in Hochschild Mining plc on September 14, 2024 and sell it today you would earn a total of 1,150 from holding Hochschild Mining plc or generate 5.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hochschild Mining plc vs. Balfour Beatty plc
Performance |
| Timeline |
| Hochschild Mining plc |
| Balfour Beatty plc |
Hochschild Mining and Balfour Beatty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hochschild Mining and Balfour Beatty
The main advantage of trading using opposite Hochschild Mining and Balfour Beatty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hochschild Mining position performs unexpectedly, Balfour Beatty 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 Balfour Beatty will offset losses from the drop in Balfour Beatty's long position.| Hochschild Mining vs. Sunny Optical Technology | Hochschild Mining vs. Symphony Environmental Technologies | Hochschild Mining vs. Solstad Offshore ASA | Hochschild Mining vs. Ironveld Plc |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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