Correlation Between Hecla Mining and Porvair Plc

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

Diversification Opportunities for Hecla Mining and Porvair Plc

-0.23

Correlation Coefficient

Hecla Mining  Porvair Plc

Very good diversification

The 3 months correlation between Hecla and Porvair is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Hecla Mining Co and Porvair plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Porvair plc 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 Porvair Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Porvair plc has no effect on the direction of Hecla Mining i.e., Hecla Mining and Porvair Plc go up and down completely randomly.

Pair Corralation between Hecla Mining and Porvair Plc

Assuming the 90 days trading horizon Hecla Mining Co is expected to generate 1.58 times more return on investment than Porvair Plc. However, Hecla Mining is 1.58 times more volatile than Porvair plc. It trades about 0.08 of its potential returns per unit of risk. Porvair plc is currently generating about -0.02 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 Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Hecla Mining Co  vs.  Porvair plc

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.

Porvair plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Porvair plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Porvair Plc is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Hecla Mining and Porvair Plc

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

The idea behind Hecla Mining Co and Porvair 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.