Correlation Between Bloomsbury Publishing and Hochschild Mining

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

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

Diversification Opportunities for Bloomsbury Publishing and Hochschild Mining

0.39

Correlation Coefficient

Bloomsbury Publishing  Hochschild Mining

Weak diversification

The 3 months correlation between Bloomsbury and Hochschild is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Bloomsbury Publishing 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 Bloomsbury Publishing 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 Bloomsbury Publishing 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 Bloomsbury Publishing i.e., Bloomsbury Publishing and Hochschild Mining go up and down completely randomly.

Pair Corralation between Bloomsbury Publishing and Hochschild Mining

Assuming the 90 days trading horizon Bloomsbury Publishing is expected to generate 11.68 times less return on investment than Hochschild Mining. But when comparing it to its historical volatility, Bloomsbury Publishing Plc is 1.33 times less risky than Hochschild Mining. It trades about 0.01 of its potential returns per unit of risk. Hochschild Mining plc is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  20,400  in Hochschild Mining plc on September 13, 2024 and sell it today you would earn a total of  2,200  from holding Hochschild Mining plc or generate 10.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.73%
Values	Daily Returns

Bloomsbury Publishing Plc  vs.  Hochschild Mining plc

Bloomsbury Publishing Plc

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bloomsbury Publishing Plc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Bloomsbury Publishing may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Hochschild Mining plc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hochschild Mining plc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Hochschild Mining exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bloomsbury Publishing and Hochschild Mining

The main advantage of trading using opposite Bloomsbury Publishing and Hochschild Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bloomsbury Publishing 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 Bloomsbury Publishing 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.