Correlation Between Hochschild Mining and Academy Sports

Can any of the company-specific risk be diversified away by investing in both Hochschild Mining and Academy Sports 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 Academy Sports 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 Academy Sports Outdoors, you can compare the effects of market volatilities on Hochschild Mining and Academy Sports 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 Academy Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hochschild Mining and Academy Sports.

Diversification Opportunities for Hochschild Mining and Academy Sports

-0.25

Correlation Coefficient

Hochschild Mining  Academy Sports

Very good diversification

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

Pair Corralation between Hochschild Mining and Academy Sports

Assuming the 90 days horizon Hochschild Mining PLC is expected to under-perform the Academy Sports. In addition to that, Hochschild Mining is 1.67 times more volatile than Academy Sports Outdoors. It trades about -0.14 of its total potential returns per unit of risk. Academy Sports Outdoors is currently generating about -0.16 per unit of volatility. If you would invest  6,117  in Academy Sports Outdoors on October 26, 2024 and sell it today you would lose (482.50) from holding Academy Sports Outdoors or give up 7.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Hochschild Mining PLC  vs.  Academy Sports Outdoors

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 fundamental 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.

Academy Sports Outdoors

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Academy Sports Outdoors are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Academy Sports may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Hochschild Mining and Academy Sports

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

The idea behind Hochschild Mining PLC and Academy Sports Outdoors 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.