Correlation Between Hochschild Mining and Futura Medical

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

Diversification Opportunities for Hochschild Mining and Futura Medical

0.06

Correlation Coefficient

Hochschild Mining  Futura Medical

Significant diversification

The 3 months correlation between Hochschild and Futura is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Hochschild Mining plc and Futura Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Futura Medical 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 Futura Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Futura Medical has no effect on the direction of Hochschild Mining i.e., Hochschild Mining and Futura Medical go up and down completely randomly.

Pair Corralation between Hochschild Mining and Futura Medical

Assuming the 90 days trading horizon Hochschild Mining plc is expected to generate 1.18 times more return on investment than Futura Medical. However, Hochschild Mining is 1.18 times more volatile than Futura Medical. It trades about 0.11 of its potential returns per unit of risk. Futura Medical is currently generating about -0.05 per unit of risk. If you would invest  18,700  in Hochschild Mining plc on September 14, 2024 and sell it today you would earn a total of  3,900  from holding Hochschild Mining plc or generate 20.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Hochschild Mining plc  vs.  Futura Medical

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.

Futura Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Futura Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Hochschild Mining and Futura Medical

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

The idea behind Hochschild Mining plc and Futura Medical 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.

Check out your portfolio center.

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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.