Correlation Between Hochschild Mining and Spirent Communications
Can any of the company-specific risk be diversified away by investing in both Hochschild Mining and Spirent Communications 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 Spirent Communications 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 Spirent Communications plc, you can compare the effects of market volatilities on Hochschild Mining and Spirent Communications 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 Spirent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hochschild Mining and Spirent Communications.
Diversification Opportunities for Hochschild Mining and Spirent Communications
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hochschild and Spirent is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Hochschild Mining plc and Spirent Communications plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirent Communications 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 Spirent Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirent Communications has no effect on the direction of Hochschild Mining i.e., Hochschild Mining and Spirent Communications go up and down completely randomly.
Pair Corralation between Hochschild Mining and Spirent Communications
Assuming the 90 days trading horizon Hochschild Mining plc is expected to under-perform the Spirent Communications. In addition to that, Hochschild Mining is 3.06 times more volatile than Spirent Communications plc. It trades about -0.16 of its total potential returns per unit of risk. Spirent Communications plc is currently generating about -0.01 per unit of volatility. If you would invest 17,100 in Spirent Communications plc on August 30, 2024 and sell it today you would lose (50.00) from holding Spirent Communications plc or give up 0.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Hochschild Mining plc vs. Spirent Communications plc
Performance |
| Timeline |
| Hochschild Mining plc |
| Spirent Communications |
Hochschild Mining and Spirent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hochschild Mining and Spirent Communications
The main advantage of trading using opposite Hochschild Mining and Spirent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hochschild Mining position performs unexpectedly, Spirent Communications 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 Spirent Communications will offset losses from the drop in Spirent Communications' long position.| Hochschild Mining vs. Bankers Investment Trust | Hochschild Mining vs. Beowulf Mining | Hochschild Mining vs. Federal Realty Investment | Hochschild Mining vs. Eastinco Mining Exploration |
| Spirent Communications vs. Lloyds Banking Group | Spirent Communications vs. Premier African Minerals | Spirent Communications vs. 88 Energy | Spirent Communications vs. Vodafone Group 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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