Correlation Between Hochschild Mining and Barrick Gold

Can any of the company-specific risk be diversified away by investing in both Hochschild Mining and Barrick Gold 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 Barrick Gold 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 Barrick Gold Corp, you can compare the effects of market volatilities on Hochschild Mining and Barrick Gold 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 Barrick Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hochschild Mining and Barrick Gold.

Diversification Opportunities for Hochschild Mining and Barrick Gold

0.83

Correlation Coefficient

Hochschild Mining  Barrick Gold

Very poor diversification

The 3 months correlation between Hochschild and Barrick is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Hochschild Mining PLC and Barrick Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barrick Gold Corp 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 Barrick Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barrick Gold Corp has no effect on the direction of Hochschild Mining i.e., Hochschild Mining and Barrick Gold go up and down completely randomly.

Pair Corralation between Hochschild Mining and Barrick Gold

Assuming the 90 days horizon Hochschild Mining PLC is expected to generate 2.55 times more return on investment than Barrick Gold. However, Hochschild Mining is 2.55 times more volatile than Barrick Gold Corp. It trades about 0.1 of its potential returns per unit of risk. Barrick Gold Corp is currently generating about 0.01 per unit of risk. If you would invest  82.00  in Hochschild Mining PLC on January 25, 2024 and sell it today you would earn a total of  107.00  from holding Hochschild Mining PLC or generate 130.49% return on investment over 90 days.

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

Hochschild Mining PLC  vs.  Barrick Gold Corp

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.

Barrick Gold Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Barrick Gold Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady essential indicators, Barrick Gold may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Hochschild Mining and Barrick Gold

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

The idea behind Hochschild Mining PLC and Barrick Gold Corp 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.