Correlation Between INTERNATIONAL and Hochschild Mining

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

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

Diversification Opportunities for INTERNATIONAL and Hochschild Mining

-0.08

Correlation Coefficient

INTERNATIONAL  Hochschild Mining

Good diversification

The 3 months correlation between INTERNATIONAL and Hochschild is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding INTERNATIONAL FLAVORS FRAGRANC 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 INTERNATIONAL 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 INTERNATIONAL FLAVORS FRAGRANCES 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 INTERNATIONAL i.e., INTERNATIONAL and Hochschild Mining go up and down completely randomly.

Pair Corralation between INTERNATIONAL and Hochschild Mining

Assuming the 90 days trading horizon INTERNATIONAL FLAVORS FRAGRANCES is expected to generate 0.11 times more return on investment than Hochschild Mining. However, INTERNATIONAL FLAVORS FRAGRANCES is 9.36 times less risky than Hochschild Mining. It trades about -0.21 of its potential returns per unit of risk. Hochschild Mining PLC is currently generating about -0.05 per unit of risk. If you would invest  9,876  in INTERNATIONAL FLAVORS FRAGRANCES on October 11, 2024 and sell it today you would lose (157.00) from holding INTERNATIONAL FLAVORS FRAGRANCES or give up 1.59% of portfolio value over 90 days.

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

INTERNATIONAL FLAVORS FRAGRANC  vs.  Hochschild Mining PLC

INTERNATIONAL FLAVORS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INTERNATIONAL FLAVORS FRAGRANCES has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, INTERNATIONAL is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hochschild Mining PLC

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hochschild Mining PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Hochschild Mining may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with INTERNATIONAL and Hochschild Mining

The main advantage of trading using opposite INTERNATIONAL and Hochschild Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTERNATIONAL 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 INTERNATIONAL FLAVORS FRAGRANCES 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.