Correlation Between HOCHSCHILD MINING and Amazon

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

By analyzing existing cross correlation between HOCHSCHILD MINING and Amazon Inc, you can compare the effects of market volatilities on HOCHSCHILD MINING and Amazon 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 Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of HOCHSCHILD MINING and Amazon.

Diversification Opportunities for HOCHSCHILD MINING and Amazon

-0.05

Correlation Coefficient

HOCHSCHILD MINING  Amazon

Good diversification

The 3 months correlation between HOCHSCHILD and Amazon is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding HOCHSCHILD MINING and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc 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 Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of HOCHSCHILD MINING i.e., HOCHSCHILD MINING and Amazon go up and down completely randomly.

Pair Corralation between HOCHSCHILD MINING and Amazon

Assuming the 90 days trading horizon HOCHSCHILD MINING is expected to under-perform the Amazon. In addition to that, HOCHSCHILD MINING is 2.71 times more volatile than Amazon Inc. It trades about -0.05 of its total potential returns per unit of risk. Amazon Inc is currently generating about -0.06 per unit of volatility. If you would invest  21,710  in Amazon Inc on October 10, 2024 and sell it today you would lose (275.00) from holding Amazon Inc or give up 1.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

HOCHSCHILD MINING  vs.  Amazon Inc

HOCHSCHILD MINING

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HOCHSCHILD MINING are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile primary indicators, HOCHSCHILD MINING exhibited solid returns over the last few months and may actually be approaching a breakup point.

Amazon Inc

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Amazon displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HOCHSCHILD MINING and Amazon

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

The idea behind HOCHSCHILD MINING and Amazon Inc 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.