Correlation Between CITIC Telecom and Hochschild Mining

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

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

Diversification Opportunities for CITIC Telecom and Hochschild Mining

-0.2

Correlation Coefficient

CITIC Telecom  Hochschild Mining

Good diversification

The 3 months correlation between CITIC and Hochschild is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Telecom International 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 CITIC Telecom 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 CITIC Telecom International 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 CITIC Telecom i.e., CITIC Telecom and Hochschild Mining go up and down completely randomly.

Pair Corralation between CITIC Telecom and Hochschild Mining

Assuming the 90 days horizon CITIC Telecom is expected to generate 12.03 times less return on investment than Hochschild Mining. In addition to that, CITIC Telecom is 1.09 times more volatile than Hochschild Mining plc. It trades about 0.01 of its total potential returns per unit of risk. Hochschild Mining plc is currently generating about 0.09 per unit of volatility. If you would invest  256.00  in Hochschild Mining plc on December 22, 2024 and sell it today you would earn a total of  47.00  from holding Hochschild Mining plc or generate 18.36% return on investment over 90 days.

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

CITIC Telecom International  vs.  Hochschild Mining plc

CITIC Telecom Intern

Risk-Adjusted Performance

Very Weak

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

Hochschild Mining plc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hochschild Mining plc are ranked lower than 7 (%) 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 CITIC Telecom and Hochschild Mining

The main advantage of trading using opposite CITIC Telecom and Hochschild Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CITIC Telecom 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 CITIC Telecom International 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.