Correlation Between Salesforce and Hochschild Mining

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

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

Diversification Opportunities for Salesforce and Hochschild Mining

0.02

Correlation Coefficient

Salesforce  Hochschild Mining

Significant diversification

The 3 months correlation between Salesforce and Hochschild is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce 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 Salesforce 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 Salesforce 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 Salesforce i.e., Salesforce and Hochschild Mining go up and down completely randomly.

Pair Corralation between Salesforce and Hochschild Mining

Considering the 90-day investment horizon Salesforce is expected to under-perform the Hochschild Mining. But the stock apears to be less risky and, when comparing its historical volatility, Salesforce is 1.77 times less risky than Hochschild Mining. The stock trades about -0.22 of its potential returns per unit of risk. The Hochschild Mining PLC is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  162.00  in Hochschild Mining PLC on January 25, 2024 and sell it today you would earn a total of  24.00  from holding Hochschild Mining PLC or generate 14.81% return on investment over 90 days.

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

Salesforce  vs.  Hochschild Mining PLC

Salesforce

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Salesforce has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Salesforce is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Hochschild Mining PLC

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hochschild Mining PLC are ranked lower than 16 (%) 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 Salesforce and Hochschild Mining

The main advantage of trading using opposite Salesforce and Hochschild Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce 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 Salesforce 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 AI Investment Finder module to use AI to screen and filter profitable investment opportunities.