Correlation Between Hochschild Mining and Golden Metal

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Can any of the company-specific risk be diversified away by investing in both Hochschild Mining and Golden Metal 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 Golden Metal 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 Golden Metal Resources, you can compare the effects of market volatilities on Hochschild Mining and Golden Metal 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 Golden Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hochschild Mining and Golden Metal.

Diversification Opportunities for Hochschild Mining and Golden Metal

-0.39
  Correlation Coefficient

Very good diversification

The 3 months correlation between Hochschild and Golden is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Hochschild Mining plc and Golden Metal Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Metal Resources 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 Golden Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Metal Resources has no effect on the direction of Hochschild Mining i.e., Hochschild Mining and Golden Metal go up and down completely randomly.

Pair Corralation between Hochschild Mining and Golden Metal

Assuming the 90 days trading horizon Hochschild Mining is expected to generate 10.73 times less return on investment than Golden Metal. But when comparing it to its historical volatility, Hochschild Mining plc is 15.49 times less risky than Golden Metal. It trades about 0.08 of its potential returns per unit of risk. Golden Metal Resources is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  9.00  in Golden Metal Resources on October 26, 2024 and sell it today you would earn a total of  3,491  from holding Golden Metal Resources or generate 38788.89% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy87.75%
ValuesDaily Returns

Hochschild Mining plc  vs.  Golden Metal Resources

 Performance 
       Timeline  
Hochschild Mining plc 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Hochschild Mining plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
Golden Metal Resources 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Golden Metal Resources are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Golden Metal unveiled solid returns over the last few months and may actually be approaching a breakup point.

Hochschild Mining and Golden Metal Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Hochschild Mining and Golden Metal

The main advantage of trading using opposite Hochschild Mining and Golden Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hochschild Mining position performs unexpectedly, Golden Metal 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 Golden Metal will offset losses from the drop in Golden Metal's long position.
The idea behind Hochschild Mining plc and Golden Metal Resources 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.
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.

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