Correlation Between HOCHSCHILD MINING and RWE AG

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

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

Diversification Opportunities for HOCHSCHILD MINING and RWE AG

0.25

Correlation Coefficient

HOCHSCHILD MINING  RWE AG

Modest diversification

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

Pair Corralation between HOCHSCHILD MINING and RWE AG

Assuming the 90 days trading horizon HOCHSCHILD MINING is expected to generate 2.64 times more return on investment than RWE AG. However, HOCHSCHILD MINING is 2.64 times more volatile than RWE AG. It trades about 0.1 of its potential returns per unit of risk. RWE AG is currently generating about 0.14 per unit of risk. If you would invest  254.00  in HOCHSCHILD MINING on December 22, 2024 and sell it today you would earn a total of  56.00  from holding HOCHSCHILD MINING or generate 22.05% return on investment over 90 days.

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

HOCHSCHILD MINING  vs.  RWE AG

HOCHSCHILD MINING

Risk-Adjusted Performance

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

RWE AG

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RWE AG are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, RWE AG exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HOCHSCHILD MINING and RWE AG

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

The idea behind HOCHSCHILD MINING and RWE AG 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.