Correlation Between Endeavour Mining and Hochschild Mining

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

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

Diversification Opportunities for Endeavour Mining and Hochschild Mining

0.08

Correlation Coefficient

Endeavour Mining  Hochschild Mining

Significant diversification

The 3 months correlation between Endeavour and Hochschild is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Endeavour Mining 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 Endeavour Mining 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 Endeavour Mining 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 Endeavour Mining i.e., Endeavour Mining and Hochschild Mining go up and down completely randomly.

Pair Corralation between Endeavour Mining and Hochschild Mining

Assuming the 90 days trading horizon Endeavour Mining PLC is expected to under-perform the Hochschild Mining. But the stock apears to be less risky and, when comparing its historical volatility, Endeavour Mining PLC is 1.58 times less risky than Hochschild Mining. The stock trades about -0.11 of its potential returns per unit of risk. The Hochschild Mining plc is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  274.00  in Hochschild Mining plc on October 11, 2024 and sell it today you would lose (4.00) from holding Hochschild Mining plc or give up 1.46% of portfolio value over 90 days.

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

Endeavour Mining PLC  vs.  Hochschild Mining plc

Endeavour Mining PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Endeavour Mining PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile 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

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hochschild Mining plc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Hochschild Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Endeavour Mining and Hochschild Mining

The main advantage of trading using opposite Endeavour Mining and Hochschild Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Endeavour Mining 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 Endeavour Mining PLC 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.