Correlation Between Hochschild Mining and Compal Electronics
Can any of the company-specific risk be diversified away by investing in both Hochschild Mining and Compal 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 Compal 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 Compal Electronics GDR, you can compare the effects of market volatilities on Hochschild Mining and Compal 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 Compal Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hochschild Mining and Compal Electronics.
Diversification Opportunities for Hochschild Mining and Compal Electronics
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Hochschild and Compal is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Hochschild Mining plc and Compal Electronics GDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compal Electronics GDR 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 Compal Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compal Electronics GDR has no effect on the direction of Hochschild Mining i.e., Hochschild Mining and Compal Electronics go up and down completely randomly.
Pair Corralation between Hochschild Mining and Compal Electronics
Assuming the 90 days trading horizon Hochschild Mining plc is expected to generate 1.28 times more return on investment than Compal Electronics. However, Hochschild Mining is 1.28 times more volatile than Compal Electronics GDR. It trades about 0.1 of its potential returns per unit of risk. Compal Electronics GDR is currently generating about 0.01 per unit of risk. If you would invest 8,310 in Hochschild Mining plc on August 31, 2024 and sell it today you would earn a total of 13,090 from holding Hochschild Mining plc or generate 157.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.47% |
| Values | Daily Returns |
Hochschild Mining plc vs. Compal Electronics GDR
Performance |
| Timeline |
| Hochschild Mining plc |
| Compal Electronics GDR |
Hochschild Mining and Compal Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hochschild Mining and Compal Electronics
The main advantage of trading using opposite Hochschild Mining and Compal Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hochschild Mining position performs unexpectedly, Compal 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 Compal Electronics will offset losses from the drop in Compal Electronics' long position.The idea behind Hochschild Mining plc and Compal Electronics GDR 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.| Compal Electronics vs. The Mercantile Investment | Compal Electronics vs. International Consolidated Airlines | Compal Electronics vs. Team Internet Group | Compal Electronics vs. Taylor Maritime Investments |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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