Correlation Between HOCHSCHILD MINING and Japan Steel

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

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

Diversification Opportunities for HOCHSCHILD MINING and Japan Steel

0.04

Correlation Coefficient

HOCHSCHILD MINING  Japan Steel

Significant diversification

The 3 months correlation between HOCHSCHILD and Japan is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding HOCHSCHILD MINING and The Japan Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Steel 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 Japan Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Steel has no effect on the direction of HOCHSCHILD MINING i.e., HOCHSCHILD MINING and Japan Steel go up and down completely randomly.

Pair Corralation between HOCHSCHILD MINING and Japan Steel

Assuming the 90 days trading horizon HOCHSCHILD MINING is expected to generate 1.31 times more return on investment than Japan Steel. However, HOCHSCHILD MINING is 1.31 times more volatile than The Japan Steel. It trades about 0.08 of its potential returns per unit of risk. The Japan Steel is currently generating about 0.06 per unit of risk. If you would invest  93.00  in HOCHSCHILD MINING on October 11, 2024 and sell it today you would earn a total of  170.00  from holding HOCHSCHILD MINING or generate 182.8% return on investment over 90 days.

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

HOCHSCHILD MINING  vs.  The Japan Steel

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 fragile primary indicators, HOCHSCHILD MINING exhibited solid returns over the last few months and may actually be approaching a breakup point.

Japan Steel

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Japan Steel are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Japan Steel 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 Japan Steel

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

The idea behind HOCHSCHILD MINING and The Japan Steel 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.