Correlation Between BII Railway and Hochschild Mining

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

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

Diversification Opportunities for BII Railway and Hochschild Mining

-0.59

Correlation Coefficient

BII Railway  Hochschild Mining

Excellent diversification

The 3 months correlation between BII and Hochschild is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding BII Railway Transportation 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 BII Railway 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 BII Railway Transportation 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 BII Railway i.e., BII Railway and Hochschild Mining go up and down completely randomly.

Pair Corralation between BII Railway and Hochschild Mining

Assuming the 90 days horizon BII Railway is expected to generate 2.79 times less return on investment than Hochschild Mining. But when comparing it to its historical volatility, BII Railway Transportation is 1.2 times less risky than Hochschild Mining. It trades about 0.02 of its potential returns per unit of risk. Hochschild Mining plc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  220.00  in Hochschild Mining plc on October 4, 2024 and sell it today you would earn a total of  41.00  from holding Hochschild Mining plc or generate 18.64% return on investment over 90 days.

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

BII Railway Transportation  vs.  Hochschild Mining plc

BII Railway Transpor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BII Railway Transportation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Hochschild Mining plc

Risk-Adjusted Performance

7 of 100

OK

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 BII Railway and Hochschild Mining

The main advantage of trading using opposite BII Railway and Hochschild Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BII Railway 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 BII Railway Transportation 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.