Correlation Between VERTIV HOLCL and HOCHSCHILD MINING

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

By analyzing existing cross correlation between VERTIV HOLCL A and HOCHSCHILD MINING, you can compare the effects of market volatilities on VERTIV HOLCL 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 VERTIV HOLCL with a short position of HOCHSCHILD MINING. Check out your portfolio center. Please also check ongoing floating volatility patterns of VERTIV HOLCL and HOCHSCHILD MINING.

Diversification Opportunities for VERTIV HOLCL and HOCHSCHILD MINING

0.75

Correlation Coefficient

VERTIV HOLCL  HOCHSCHILD MINING

Poor diversification

The 3 months correlation between VERTIV and HOCHSCHILD is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding VERTIV HOLCL A and HOCHSCHILD MINING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HOCHSCHILD MINING and VERTIV HOLCL 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 VERTIV HOLCL A 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 has no effect on the direction of VERTIV HOLCL i.e., VERTIV HOLCL and HOCHSCHILD MINING go up and down completely randomly.

Pair Corralation between VERTIV HOLCL and HOCHSCHILD MINING

Assuming the 90 days horizon VERTIV HOLCL A is expected to generate 1.05 times more return on investment than HOCHSCHILD MINING. However, VERTIV HOLCL is 1.05 times more volatile than HOCHSCHILD MINING. It trades about 0.26 of its potential returns per unit of risk. HOCHSCHILD MINING is currently generating about 0.14 per unit of risk. If you would invest  6,696  in VERTIV HOLCL A on September 5, 2024 and sell it today you would earn a total of  5,534  from holding VERTIV HOLCL A or generate 82.65% return on investment over 90 days.

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

VERTIV HOLCL A  vs.  HOCHSCHILD MINING

VERTIV HOLCL A

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in VERTIV HOLCL A are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, VERTIV HOLCL reported solid returns over the last few months and may actually be approaching a breakup point.

HOCHSCHILD MINING

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HOCHSCHILD MINING are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, HOCHSCHILD MINING exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VERTIV HOLCL and HOCHSCHILD MINING

The main advantage of trading using opposite VERTIV HOLCL and HOCHSCHILD MINING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VERTIV HOLCL 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 VERTIV HOLCL A and HOCHSCHILD MINING 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.