Correlation Between HOCHSCHILD MINING and Genuine Parts

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

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

Diversification Opportunities for HOCHSCHILD MINING and Genuine Parts

0.21

Correlation Coefficient

HOCHSCHILD MINING  Genuine Parts

Modest diversification

The 3 months correlation between HOCHSCHILD and Genuine is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding HOCHSCHILD MINING and Genuine Parts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genuine Parts 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 Genuine Parts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genuine Parts has no effect on the direction of HOCHSCHILD MINING i.e., HOCHSCHILD MINING and Genuine Parts go up and down completely randomly.

Pair Corralation between HOCHSCHILD MINING and Genuine Parts

Assuming the 90 days trading horizon HOCHSCHILD MINING is expected to under-perform the Genuine Parts. In addition to that, HOCHSCHILD MINING is 2.79 times more volatile than Genuine Parts. It trades about -0.08 of its total potential returns per unit of risk. Genuine Parts is currently generating about -0.02 per unit of volatility. If you would invest  11,978  in Genuine Parts on December 4, 2024 and sell it today you would lose (223.00) from holding Genuine Parts or give up 1.86% of portfolio value over 90 days.

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

HOCHSCHILD MINING  vs.  Genuine Parts

HOCHSCHILD MINING

Risk-Adjusted Performance

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 fragile performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Genuine Parts

Risk-Adjusted Performance

Very Weak

Over the last 90 days Genuine Parts has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Genuine Parts is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with HOCHSCHILD MINING and Genuine Parts

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

The idea behind HOCHSCHILD MINING and Genuine Parts 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.