Correlation Between Hochschild Mining and BE Semiconductor

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

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

Diversification Opportunities for Hochschild Mining and BE Semiconductor

-0.11

Correlation Coefficient

Hochschild Mining  BE Semiconductor

Good diversification

The 3 months correlation between Hochschild and BSI is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Hochschild Mining plc and BE Semiconductor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BE Semiconductor Ind and Hochschild Mining 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 Hochschild Mining plc are associated (or correlated) with BE Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BE Semiconductor Ind has no effect on the direction of Hochschild Mining i.e., Hochschild Mining and BE Semiconductor go up and down completely randomly.

Pair Corralation between Hochschild Mining and BE Semiconductor

Assuming the 90 days horizon Hochschild Mining plc is expected to generate 1.25 times more return on investment than BE Semiconductor. However, Hochschild Mining is 1.25 times more volatile than BE Semiconductor Industries. It trades about 0.09 of its potential returns per unit of risk. BE Semiconductor Industries is currently generating about 0.11 per unit of risk. If you would invest  219.00  in Hochschild Mining plc on September 29, 2024 and sell it today you would earn a total of  37.00  from holding Hochschild Mining plc or generate 16.89% return on investment over 90 days.

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

Hochschild Mining plc  vs.  BE Semiconductor Industries

Hochschild Mining plc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hochschild Mining plc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Hochschild Mining reported solid returns over the last few months and may actually be approaching a breakup point.

BE Semiconductor Ind

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BE Semiconductor Industries are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, BE Semiconductor unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hochschild Mining and BE Semiconductor

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

The idea behind Hochschild Mining plc and BE Semiconductor Industries 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.