Correlation Between Focus Home and HOCHSCHILD MINING

Can any of the company-specific risk be diversified away by investing in both Focus Home 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 Focus Home and HOCHSCHILD MINING into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Focus Home Interactive and HOCHSCHILD MINING, you can compare the effects of market volatilities on Focus Home 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 Focus Home with a short position of HOCHSCHILD MINING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Focus Home and HOCHSCHILD MINING.

Diversification Opportunities for Focus Home and HOCHSCHILD MINING

-0.22

Correlation Coefficient

Focus Home  HOCHSCHILD MINING

Very good diversification

The 3 months correlation between Focus and HOCHSCHILD is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Focus Home Interactive and HOCHSCHILD MINING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HOCHSCHILD MINING and Focus Home 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 Focus Home Interactive 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 has no effect on the direction of Focus Home i.e., Focus Home and HOCHSCHILD MINING go up and down completely randomly.

Pair Corralation between Focus Home and HOCHSCHILD MINING

Assuming the 90 days horizon Focus Home Interactive is expected to under-perform the HOCHSCHILD MINING. In addition to that, Focus Home is 1.29 times more volatile than HOCHSCHILD MINING. It trades about -0.02 of its total potential returns per unit of risk. HOCHSCHILD MINING is currently generating about 0.08 per unit of volatility. If you would invest  95.00  in HOCHSCHILD MINING on October 5, 2024 and sell it today you would earn a total of  170.00  from holding HOCHSCHILD MINING or generate 178.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Focus Home Interactive  vs.  HOCHSCHILD MINING

Focus Home Interactive

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Focus Home Interactive has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Focus Home is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

HOCHSCHILD MINING

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days HOCHSCHILD MINING has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather uncertain primary indicators, HOCHSCHILD MINING exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Focus Home and HOCHSCHILD MINING

The main advantage of trading using opposite Focus Home and HOCHSCHILD MINING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Focus Home 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 Focus Home Interactive and HOCHSCHILD MINING 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.

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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.