Correlation Between SBM OFFSHORE and Hochschild Mining
Can any of the company-specific risk be diversified away by investing in both SBM OFFSHORE 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 SBM OFFSHORE and Hochschild Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBM OFFSHORE and Hochschild Mining plc, you can compare the effects of market volatilities on SBM OFFSHORE 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 SBM OFFSHORE with a short position of Hochschild Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM OFFSHORE and Hochschild Mining.
Diversification Opportunities for SBM OFFSHORE and Hochschild Mining
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SBM and Hochschild is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding SBM OFFSHORE 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 SBM OFFSHORE 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 SBM OFFSHORE 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 SBM OFFSHORE i.e., SBM OFFSHORE and Hochschild Mining go up and down completely randomly.
Pair Corralation between SBM OFFSHORE and Hochschild Mining
Assuming the 90 days trading horizon SBM OFFSHORE is expected to generate 2.93 times less return on investment than Hochschild Mining. But when comparing it to its historical volatility, SBM OFFSHORE is 2.33 times less risky than Hochschild Mining. It trades about 0.07 of its potential returns per unit of risk. Hochschild Mining plc is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 98.00 in Hochschild Mining plc on August 24, 2024 and sell it today you would earn a total of 175.00 from holding Hochschild Mining plc or generate 178.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBM OFFSHORE vs. Hochschild Mining plc
Performance |
| Timeline |
| SBM OFFSHORE |
| Hochschild Mining plc |
SBM OFFSHORE and Hochschild Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM OFFSHORE and Hochschild Mining
The main advantage of trading using opposite SBM OFFSHORE and Hochschild Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM OFFSHORE 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.| SBM OFFSHORE vs. Altair Engineering | SBM OFFSHORE vs. NORWEGIAN AIR SHUT | SBM OFFSHORE vs. FORWARD AIR P | SBM OFFSHORE vs. Global Ship Lease |
| Hochschild Mining vs. Sanyo Chemical Industries | Hochschild Mining vs. Eastman Chemical | Hochschild Mining vs. SHIN ETSU CHEMICAL | Hochschild Mining vs. Sumitomo Mitsui Construction |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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