Correlation Between Agnico Eagle and Hochschild Mining

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Can any of the company-specific risk be diversified away by investing in both Agnico Eagle 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 Agnico Eagle and Hochschild Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Agnico Eagle Mines and Hochschild Mining PLC, you can compare the effects of market volatilities on Agnico Eagle 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 Agnico Eagle with a short position of Hochschild Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agnico Eagle and Hochschild Mining.

Diversification Opportunities for Agnico Eagle and Hochschild Mining

0.75
  Correlation Coefficient

Poor diversification

The 3 months correlation between Agnico and Hochschild is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Agnico Eagle Mines 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 Agnico Eagle 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 Agnico Eagle Mines 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 Agnico Eagle i.e., Agnico Eagle and Hochschild Mining go up and down completely randomly.

Pair Corralation between Agnico Eagle and Hochschild Mining

Considering the 90-day investment horizon Agnico Eagle is expected to generate 8.26 times less return on investment than Hochschild Mining. But when comparing it to its historical volatility, Agnico Eagle Mines is 2.24 times less risky than Hochschild Mining. It trades about 0.01 of its potential returns per unit of risk. Hochschild Mining PLC is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  165.00  in Hochschild Mining PLC on December 29, 2023 and sell it today you would lose (3.00) from holding Hochschild Mining PLC or give up 1.82% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy99.6%
ValuesDaily Returns

Agnico Eagle Mines  vs.  Hochschild Mining PLC

 Performance 
       Timeline  
Agnico Eagle Mines 

Risk-Adjusted Performance

4 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Agnico Eagle Mines are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Agnico Eagle may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Hochschild Mining PLC 

Risk-Adjusted Performance

7 of 100

 
Low
 
High
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 unfluctuating fundamental indicators, Hochschild Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Agnico Eagle and Hochschild Mining Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Agnico Eagle and Hochschild Mining

The main advantage of trading using opposite Agnico Eagle and Hochschild Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agnico Eagle 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 Agnico Eagle Mines 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.

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