Correlation Between Hochschild Mining and Dominos Pizza

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

Diversification Opportunities for Hochschild Mining and Dominos Pizza

0.29

Correlation Coefficient

Hochschild Mining  Dominos Pizza

Modest diversification

The 3 months correlation between Hochschild and Dominos is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Hochschild Mining plc and Dominos Pizza Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dominos Pizza Group 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 Dominos Pizza. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dominos Pizza Group has no effect on the direction of Hochschild Mining i.e., Hochschild Mining and Dominos Pizza go up and down completely randomly.

Pair Corralation between Hochschild Mining and Dominos Pizza

Assuming the 90 days trading horizon Hochschild Mining plc is expected to generate 1.68 times more return on investment than Dominos Pizza. However, Hochschild Mining is 1.68 times more volatile than Dominos Pizza Group. It trades about 0.08 of its potential returns per unit of risk. Dominos Pizza Group is currently generating about 0.02 per unit of risk. If you would invest  8,375  in Hochschild Mining plc on October 5, 2024 and sell it today you would earn a total of  13,775  from holding Hochschild Mining plc or generate 164.48% 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.  Dominos Pizza Group

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.

Dominos Pizza Group

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Dominos Pizza Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Dominos Pizza is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Hochschild Mining and Dominos Pizza

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

The idea behind Hochschild Mining plc and Dominos Pizza Group 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.