Correlation Between Hochschild Mining and Neometals
Can any of the company-specific risk be diversified away by investing in both Hochschild Mining and Neometals 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 Neometals 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 Neometals, you can compare the effects of market volatilities on Hochschild Mining and Neometals 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 Neometals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hochschild Mining and Neometals.
Diversification Opportunities for Hochschild Mining and Neometals
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hochschild and Neometals is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Hochschild Mining plc and Neometals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neometals 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 Neometals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neometals has no effect on the direction of Hochschild Mining i.e., Hochschild Mining and Neometals go up and down completely randomly.
Pair Corralation between Hochschild Mining and Neometals
Assuming the 90 days trading horizon Hochschild Mining plc is expected to generate 0.68 times more return on investment than Neometals. However, Hochschild Mining plc is 1.48 times less risky than Neometals. It trades about 0.1 of its potential returns per unit of risk. Neometals is currently generating about -0.09 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 | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.74% |
| Values | Daily Returns |
Hochschild Mining plc vs. Neometals
Performance |
| Timeline |
| Hochschild Mining plc |
| Neometals |
Hochschild Mining and Neometals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hochschild Mining and Neometals
The main advantage of trading using opposite Hochschild Mining and Neometals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hochschild Mining position performs unexpectedly, Neometals 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 Neometals will offset losses from the drop in Neometals' long position.The idea behind Hochschild Mining plc and Neometals 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.| Neometals vs. Live Nation Entertainment | Neometals vs. Dalata Hotel Group | Neometals vs. Intermediate Capital Group | Neometals vs. Flutter Entertainment PLC |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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