Correlation Between HOCHSCHILD MINING and EMERSON ELECTRIC

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

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

Diversification Opportunities for HOCHSCHILD MINING and EMERSON ELECTRIC

0.1

Correlation Coefficient

HOCHSCHILD MINING  EMERSON ELECTRIC

Average diversification

The 3 months correlation between HOCHSCHILD and EMERSON is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding HOCHSCHILD MINING and EMERSON ELECTRIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMERSON ELECTRIC 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 EMERSON ELECTRIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMERSON ELECTRIC has no effect on the direction of HOCHSCHILD MINING i.e., HOCHSCHILD MINING and EMERSON ELECTRIC go up and down completely randomly.

Pair Corralation between HOCHSCHILD MINING and EMERSON ELECTRIC

Assuming the 90 days trading horizon HOCHSCHILD MINING is expected to generate 2.66 times more return on investment than EMERSON ELECTRIC. However, HOCHSCHILD MINING is 2.66 times more volatile than EMERSON ELECTRIC. It trades about -0.01 of its potential returns per unit of risk. EMERSON ELECTRIC is currently generating about -0.26 per unit of risk. If you would invest  259.00  in HOCHSCHILD MINING on October 4, 2024 and sell it today you would lose (3.00) from holding HOCHSCHILD MINING or give up 1.16% of portfolio value over 90 days.

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

HOCHSCHILD MINING  vs.  EMERSON ELECTRIC

HOCHSCHILD MINING

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in HOCHSCHILD MINING are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak primary indicators, HOCHSCHILD MINING exhibited solid returns over the last few months and may actually be approaching a breakup point.

EMERSON ELECTRIC

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EMERSON ELECTRIC are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, EMERSON ELECTRIC unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HOCHSCHILD MINING and EMERSON ELECTRIC

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

The idea behind HOCHSCHILD MINING and EMERSON ELECTRIC 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.