Correlation Between Hochschild Mining and Molson Coors

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

Diversification Opportunities for Hochschild Mining and Molson Coors

0.35

Correlation Coefficient

Hochschild Mining  Molson Coors

Weak diversification

The 3 months correlation between Hochschild and Molson is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Hochschild Mining plc and Molson Coors Beverage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molson Coors Beverage 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 Molson Coors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molson Coors Beverage has no effect on the direction of Hochschild Mining i.e., Hochschild Mining and Molson Coors go up and down completely randomly.

Pair Corralation between Hochschild Mining and Molson Coors

Assuming the 90 days trading horizon Hochschild Mining is expected to generate 1.01 times less return on investment than Molson Coors. In addition to that, Hochschild Mining is 1.85 times more volatile than Molson Coors Beverage. It trades about 0.05 of its total potential returns per unit of risk. Molson Coors Beverage is currently generating about 0.09 per unit of volatility. If you would invest  5,244  in Molson Coors Beverage on September 1, 2024 and sell it today you would earn a total of  975.00  from holding Molson Coors Beverage or generate 18.59% 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 plc  vs.  Molson Coors Beverage

Hochschild Mining plc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hochschild Mining plc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Hochschild Mining exhibited solid returns over the last few months and may actually be approaching a breakup point.

Molson Coors Beverage

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Molson Coors Beverage are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Molson Coors may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Hochschild Mining and Molson Coors

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

The idea behind Hochschild Mining plc and Molson Coors Beverage 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.