Correlation Between Hochschild Mining and Chocoladefabriken

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

Diversification Opportunities for Hochschild Mining and Chocoladefabriken

-0.27

Correlation Coefficient

Hochschild Mining  Chocoladefabriken

Very good diversification

The 3 months correlation between Hochschild and Chocoladefabriken is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Hochschild Mining plc and Chocoladefabriken Lindt Spruen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chocoladefabriken Lindt 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 Chocoladefabriken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chocoladefabriken Lindt has no effect on the direction of Hochschild Mining i.e., Hochschild Mining and Chocoladefabriken go up and down completely randomly.

Pair Corralation between Hochschild Mining and Chocoladefabriken

Assuming the 90 days trading horizon Hochschild Mining plc is expected to generate 2.71 times more return on investment than Chocoladefabriken. However, Hochschild Mining is 2.71 times more volatile than Chocoladefabriken Lindt Spruengli. It trades about 0.13 of its potential returns per unit of risk. Chocoladefabriken Lindt Spruengli is currently generating about 0.02 per unit of risk. If you would invest  8,140  in Hochschild Mining plc on October 5, 2024 and sell it today you would earn a total of  14,160  from holding Hochschild Mining plc or generate 173.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.04%
Values	Daily Returns

Hochschild Mining plc  vs.  Chocoladefabriken Lindt Spruen

Hochschild Mining plc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hochschild Mining plc are ranked lower than 8 (%) 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.

Chocoladefabriken Lindt

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chocoladefabriken Lindt Spruengli has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Hochschild Mining and Chocoladefabriken

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

The idea behind Hochschild Mining plc and Chocoladefabriken Lindt Spruengli 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.