Correlation Between Hochschild Mining and Redcare Pharmacy

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

By analyzing existing cross correlation between Hochschild Mining plc and Redcare Pharmacy NV, you can compare the effects of market volatilities on Hochschild Mining and Redcare Pharmacy 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 Redcare Pharmacy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hochschild Mining and Redcare Pharmacy.

Diversification Opportunities for Hochschild Mining and Redcare Pharmacy

0.22

Correlation Coefficient

Hochschild Mining  Redcare Pharmacy

Modest diversification

The 3 months correlation between Hochschild and Redcare is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Hochschild Mining plc and Redcare Pharmacy NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Redcare Pharmacy 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 plc are associated (or correlated) with Redcare Pharmacy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Redcare Pharmacy has no effect on the direction of Hochschild Mining i.e., Hochschild Mining and Redcare Pharmacy go up and down completely randomly.

Pair Corralation between Hochschild Mining and Redcare Pharmacy

Assuming the 90 days horizon Hochschild Mining plc is expected to under-perform the Redcare Pharmacy. In addition to that, Hochschild Mining is 1.23 times more volatile than Redcare Pharmacy NV. It trades about -0.08 of its total potential returns per unit of risk. Redcare Pharmacy NV is currently generating about -0.09 per unit of volatility. If you would invest  14,730  in Redcare Pharmacy NV on October 26, 2024 and sell it today you would lose (2,490) from holding Redcare Pharmacy NV or give up 16.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Hochschild Mining plc  vs.  Redcare Pharmacy NV

Hochschild Mining plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hochschild Mining plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Redcare Pharmacy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Redcare Pharmacy NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Hochschild Mining and Redcare Pharmacy

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

The idea behind Hochschild Mining plc and Redcare Pharmacy NV 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.