Correlation Between International Consolidated and Hochschild Mining
Can any of the company-specific risk be diversified away by investing in both International Consolidated and Hochschild Mining 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 International Consolidated and Hochschild Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Consolidated Airlines and Hochschild Mining plc, you can compare the effects of market volatilities on International Consolidated and Hochschild Mining 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 International Consolidated with a short position of Hochschild Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Consolidated and Hochschild Mining.
Diversification Opportunities for International Consolidated and Hochschild Mining
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between International and Hochschild is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Air and Hochschild Mining plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hochschild Mining plc and International Consolidated 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 International Consolidated Airlines are associated (or correlated) with Hochschild Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hochschild Mining plc has no effect on the direction of International Consolidated i.e., International Consolidated and Hochschild Mining go up and down completely randomly.
Pair Corralation between International Consolidated and Hochschild Mining
Assuming the 90 days trading horizon International Consolidated is expected to generate 1.94 times less return on investment than Hochschild Mining. But when comparing it to its historical volatility, International Consolidated Airlines is 1.62 times less risky than Hochschild Mining. It trades about 0.08 of its potential returns per unit of risk. Hochschild Mining plc is currently generating about 0.1 of returns per unit of risk over similar time horizon. 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 Together |
| Strength | Significant |
| Accuracy | 99.74% |
| Values | Daily Returns |
International Consolidated Air vs. Hochschild Mining plc
Performance |
| Timeline |
| International Consolidated |
| Hochschild Mining plc |
International Consolidated and Hochschild Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Consolidated and Hochschild Mining
The main advantage of trading using opposite International Consolidated and Hochschild Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Consolidated position performs unexpectedly, Hochschild Mining 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 Hochschild Mining will offset losses from the drop in Hochschild Mining's long position.The idea behind International Consolidated Airlines and Hochschild Mining plc 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.
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |