Correlation Between Beazer Homes and Hochschild Mining

Can any of the company-specific risk be diversified away by investing in both Beazer Homes 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 Beazer Homes and Hochschild Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Beazer Homes USA and Hochschild Mining plc, you can compare the effects of market volatilities on Beazer Homes 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 Beazer Homes with a short position of Hochschild Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beazer Homes and Hochschild Mining.

Diversification Opportunities for Beazer Homes and Hochschild Mining

0.36

Correlation Coefficient

Beazer Homes  Hochschild Mining

Weak diversification

The 3 months correlation between Beazer and Hochschild is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Beazer Homes USA 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 Beazer Homes 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 Beazer Homes USA 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 Beazer Homes i.e., Beazer Homes and Hochschild Mining go up and down completely randomly.

Pair Corralation between Beazer Homes and Hochschild Mining

Assuming the 90 days trading horizon Beazer Homes USA is expected to generate 1.34 times more return on investment than Hochschild Mining. However, Beazer Homes is 1.34 times more volatile than Hochschild Mining plc. It trades about 0.07 of its potential returns per unit of risk. Hochschild Mining plc is currently generating about 0.08 per unit of risk. If you would invest  1,517  in Beazer Homes USA on October 11, 2024 and sell it today you would earn a total of  1,108  from holding Beazer Homes USA or generate 73.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	59.15%
Values	Daily Returns

Beazer Homes USA  vs.  Hochschild Mining plc

Beazer Homes USA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beazer Homes USA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Hochschild Mining plc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hochschild Mining plc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Hochschild Mining may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Beazer Homes and Hochschild Mining

The main advantage of trading using opposite Beazer Homes and Hochschild Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beazer Homes 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 Beazer Homes USA 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.

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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.