Correlation Between GEO and Hochschild Mining

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

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

Diversification Opportunities for GEO and Hochschild Mining

0.55

Correlation Coefficient

GEO  Hochschild Mining

Very weak diversification

The 3 months correlation between GEO and Hochschild is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding The GEO Group 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 GEO 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 The GEO Group 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 GEO i.e., GEO and Hochschild Mining go up and down completely randomly.

Pair Corralation between GEO and Hochschild Mining

Assuming the 90 days horizon The GEO Group is expected to generate 3.17 times more return on investment than Hochschild Mining. However, GEO is 3.17 times more volatile than Hochschild Mining plc. It trades about 0.34 of its potential returns per unit of risk. Hochschild Mining plc is currently generating about -0.03 per unit of risk. If you would invest  1,388  in The GEO Group on September 1, 2024 and sell it today you would earn a total of  1,268  from holding The GEO Group or generate 91.35% return on investment over 90 days.

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

The GEO Group  vs.  Hochschild Mining plc

GEO Group

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The GEO Group are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, GEO reported solid returns over the last few months and may actually be approaching a breakup point.

Hochschild Mining plc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hochschild Mining plc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Hochschild Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GEO and Hochschild Mining

The main advantage of trading using opposite GEO and Hochschild Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GEO 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 The GEO Group 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.