Correlation Between Hochschild Mining and Compass Group
Can any of the company-specific risk be diversified away by investing in both Hochschild Mining and Compass Group 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 Compass Group 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 Compass Group PLC, you can compare the effects of market volatilities on Hochschild Mining and Compass Group 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 Compass Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hochschild Mining and Compass Group.
Diversification Opportunities for Hochschild Mining and Compass Group
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hochschild and Compass is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Hochschild Mining plc and Compass Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compass Group 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 Compass Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compass Group PLC has no effect on the direction of Hochschild Mining i.e., Hochschild Mining and Compass Group go up and down completely randomly.
Pair Corralation between Hochschild Mining and Compass Group
Assuming the 90 days trading horizon Hochschild Mining plc is expected to generate 3.67 times more return on investment than Compass Group. However, Hochschild Mining is 3.67 times more volatile than Compass Group PLC. It trades about 0.09 of its potential returns per unit of risk. Compass Group PLC is currently generating about 0.11 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. Compass Group PLC
Performance |
| Timeline |
| Hochschild Mining plc |
| Compass Group PLC |
Hochschild Mining and Compass Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hochschild Mining and Compass Group
The main advantage of trading using opposite Hochschild Mining and Compass Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hochschild Mining position performs unexpectedly, Compass Group 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 Compass Group will offset losses from the drop in Compass Group'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 |
| Compass Group vs. GoldMining | Compass Group vs. Fortune Brands Home | Compass Group vs. Hochschild Mining plc | Compass Group vs. Young Cos Brewery |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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