Correlation Between London Security and Hochschild Mining
Can any of the company-specific risk be diversified away by investing in both London Security 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 London Security and Hochschild Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between London Security Plc and Hochschild Mining plc, you can compare the effects of market volatilities on London Security 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 London Security with a short position of Hochschild Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of London Security and Hochschild Mining.
Diversification Opportunities for London Security and Hochschild Mining
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between London and Hochschild is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding London Security Plc 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 London Security 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 London Security Plc 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 London Security i.e., London Security and Hochschild Mining go up and down completely randomly.
Pair Corralation between London Security and Hochschild Mining
Assuming the 90 days trading horizon London Security is expected to generate 1.69 times less return on investment than Hochschild Mining. But when comparing it to its historical volatility, London Security Plc is 2.24 times less risky than Hochschild Mining. It trades about 0.06 of its potential returns per unit of risk. Hochschild Mining plc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 18,800 in Hochschild Mining plc on September 1, 2024 and sell it today you would earn a total of 2,600 from holding Hochschild Mining plc or generate 13.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.23% |
| Values | Daily Returns |
London Security Plc vs. Hochschild Mining plc
Performance |
| Timeline |
| London Security Plc |
| Hochschild Mining plc |
London Security and Hochschild Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with London Security and Hochschild Mining
The main advantage of trading using opposite London Security and Hochschild Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if London Security 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.| London Security vs. Samsung Electronics Co | London Security vs. Samsung Electronics Co | London Security vs. Hyundai Motor | London Security vs. Toyota Motor Corp |
| Hochschild Mining vs. Givaudan SA | Hochschild Mining vs. Antofagasta PLC | Hochschild Mining vs. Centamin PLC | Hochschild Mining vs. Atalaya Mining |
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 CEOs Directory module to screen CEOs from public companies around the world.
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