Correlation Between HOCHSCHILD MINING and Pandora A/S

Can any of the company-specific risk be diversified away by investing in both HOCHSCHILD MINING and Pandora A/S 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 HOCHSCHILD MINING and Pandora A/S into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HOCHSCHILD MINING and Pandora AS, you can compare the effects of market volatilities on HOCHSCHILD MINING and Pandora A/S 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 HOCHSCHILD MINING with a short position of Pandora A/S. Check out your portfolio center. Please also check ongoing floating volatility patterns of HOCHSCHILD MINING and Pandora A/S.

Diversification Opportunities for HOCHSCHILD MINING and Pandora A/S

-0.25

Correlation Coefficient

HOCHSCHILD MINING  Pandora A/S

Very good diversification

The 3 months correlation between HOCHSCHILD and Pandora is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding HOCHSCHILD MINING and Pandora AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pandora A/S and HOCHSCHILD 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 HOCHSCHILD MINING are associated (or correlated) with Pandora A/S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pandora A/S has no effect on the direction of HOCHSCHILD MINING i.e., HOCHSCHILD MINING and Pandora A/S go up and down completely randomly.

Pair Corralation between HOCHSCHILD MINING and Pandora A/S

Assuming the 90 days trading horizon HOCHSCHILD MINING is expected to under-perform the Pandora A/S. In addition to that, HOCHSCHILD MINING is 1.65 times more volatile than Pandora AS. It trades about -0.04 of its total potential returns per unit of risk. Pandora AS is currently generating about 0.2 per unit of volatility. If you would invest  13,975  in Pandora AS on October 24, 2024 and sell it today you would earn a total of  3,500  from holding Pandora AS or generate 25.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

HOCHSCHILD MINING  vs.  Pandora AS

HOCHSCHILD MINING

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HOCHSCHILD MINING has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pandora A/S

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pandora AS are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Pandora A/S reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HOCHSCHILD MINING and Pandora A/S

The main advantage of trading using opposite HOCHSCHILD MINING and Pandora A/S positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HOCHSCHILD MINING position performs unexpectedly, Pandora A/S 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 Pandora A/S will offset losses from the drop in Pandora A/S's long position.

The idea behind HOCHSCHILD MINING and Pandora AS 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.