Correlation Between Hecla Mining and Ebro Foods

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

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

Diversification Opportunities for Hecla Mining and Ebro Foods

0.43

Correlation Coefficient

Hecla Mining  Ebro Foods

Very weak diversification

The 3 months correlation between Hecla and Ebro is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Hecla Mining Co and Ebro Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebro Foods and Hecla 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 Hecla Mining Co are associated (or correlated) with Ebro Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ebro Foods has no effect on the direction of Hecla Mining i.e., Hecla Mining and Ebro Foods go up and down completely randomly.

Pair Corralation between Hecla Mining and Ebro Foods

Assuming the 90 days trading horizon Hecla Mining Co is expected to generate 5.54 times more return on investment than Ebro Foods. However, Hecla Mining is 5.54 times more volatile than Ebro Foods. It trades about 0.08 of its potential returns per unit of risk. Ebro Foods is currently generating about 0.14 per unit of risk. If you would invest  508.00  in Hecla Mining Co on December 22, 2024 and sell it today you would earn a total of  66.00  from holding Hecla Mining Co or generate 12.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Hecla Mining Co  vs.  Ebro Foods

Hecla Mining

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hecla Mining Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Hecla Mining unveiled solid returns over the last few months and may actually be approaching a breakup point.

Ebro Foods

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ebro Foods are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Ebro Foods is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Hecla Mining and Ebro Foods

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

The idea behind Hecla Mining Co and Ebro Foods 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.