Correlation Between LOEWS and Hochschild Mining

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

By analyzing existing cross correlation between LOEWS P 6 and Hochschild Mining PLC, you can compare the effects of market volatilities on LOEWS 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 LOEWS with a short position of Hochschild Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of LOEWS and Hochschild Mining.

Diversification Opportunities for LOEWS and Hochschild Mining

-0.44

Correlation Coefficient

LOEWS  Hochschild Mining

Very good diversification

The 3 months correlation between LOEWS and Hochschild is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding LOEWS P 6 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 LOEWS 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 LOEWS P 6 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 LOEWS i.e., LOEWS and Hochschild Mining go up and down completely randomly.

Pair Corralation between LOEWS and Hochschild Mining

Assuming the 90 days trading horizon LOEWS is expected to generate 27.99 times less return on investment than Hochschild Mining. But when comparing it to its historical volatility, LOEWS P 6 is 6.0 times less risky than Hochschild Mining. It trades about 0.03 of its potential returns per unit of risk. Hochschild Mining PLC is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  266.00  in Hochschild Mining PLC on December 24, 2024 and sell it today you would earn a total of  79.00  from holding Hochschild Mining PLC or generate 29.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	90.16%
Values	Daily Returns

LOEWS P 6  vs.  Hochschild Mining PLC

LOEWS P 6

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in LOEWS P 6 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, LOEWS is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Hochschild Mining PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hochschild Mining PLC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Hochschild Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LOEWS and Hochschild Mining

The main advantage of trading using opposite LOEWS and Hochschild Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LOEWS 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 LOEWS P 6 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.