Correlation Between Hochschild Mining and United Internet

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

Diversification Opportunities for Hochschild Mining and United Internet

0.65

Correlation Coefficient

Hochschild Mining  United Internet

Poor diversification

The 3 months correlation between Hochschild and United is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Hochschild Mining plc and United Internet AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Internet 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 plc are associated (or correlated) with United Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Internet AG has no effect on the direction of Hochschild Mining i.e., Hochschild Mining and United Internet go up and down completely randomly.

Pair Corralation between Hochschild Mining and United Internet

Assuming the 90 days trading horizon Hochschild Mining plc is expected to generate 1.27 times more return on investment than United Internet. However, Hochschild Mining is 1.27 times more volatile than United Internet AG. It trades about 0.15 of its potential returns per unit of risk. United Internet AG is currently generating about -0.06 per unit of risk. If you would invest  9,390  in Hochschild Mining plc on October 22, 2024 and sell it today you would earn a total of  12,660  from holding Hochschild Mining plc or generate 134.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.56%
Values	Daily Returns

Hochschild Mining plc  vs.  United Internet AG

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. In spite of rather sound technical and fundamental indicators, Hochschild Mining is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

United Internet AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United Internet AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic 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 United Internet

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

The idea behind Hochschild Mining plc and United Internet 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.