Correlation Between Newmont and Hochschild Mining

Can any of the company-specific risk be diversified away by investing in both Newmont and Hochschild Mining 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 Newmont and Hochschild Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Newmont and Hochschild Mining plc, you can compare the effects of market volatilities on Newmont and Hochschild Mining 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 Newmont with a short position of Hochschild Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newmont and Hochschild Mining.

Diversification Opportunities for Newmont and Hochschild Mining

-0.24

Correlation Coefficient

Newmont  Hochschild Mining

Very good diversification

The 3 months correlation between Newmont and Hochschild is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Newmont and Hochschild Mining plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hochschild Mining plc and Newmont 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 Newmont are associated (or correlated) with Hochschild Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hochschild Mining plc has no effect on the direction of Newmont i.e., Newmont and Hochschild Mining go up and down completely randomly.

Pair Corralation between Newmont and Hochschild Mining

Assuming the 90 days horizon Newmont is expected to under-perform the Hochschild Mining. But the stock apears to be less risky and, when comparing its historical volatility, Newmont is 1.41 times less risky than Hochschild Mining. The stock trades about -0.01 of its potential returns per unit of risk. The Hochschild Mining plc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  209.00  in Hochschild Mining plc on September 26, 2024 and sell it today you would earn a total of  47.00  from holding Hochschild Mining plc or generate 22.49% return on investment over 90 days.

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

Newmont  vs.  Hochschild Mining plc

Newmont

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Newmont has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Hochschild Mining plc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hochschild Mining plc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Hochschild Mining may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Newmont and Hochschild Mining

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

The idea behind Newmont and Hochschild Mining plc 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 Commodity Directory module to find actively traded commodities issued by global exchanges.