Correlation Between Compania and Hecla Mining

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

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

Diversification Opportunities for Compania and Hecla Mining

0.53

Correlation Coefficient

Compania  Hecla Mining

Very weak diversification

The 3 months correlation between Compania and Hecla is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Compania de Minas and Hecla Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hecla Mining and Compania 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 Compania de Minas are associated (or correlated) with Hecla Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hecla Mining has no effect on the direction of Compania i.e., Compania and Hecla Mining go up and down completely randomly.

Pair Corralation between Compania and Hecla Mining

Considering the 90-day investment horizon Compania de Minas is expected to generate 0.35 times more return on investment than Hecla Mining. However, Compania de Minas is 2.85 times less risky than Hecla Mining. It trades about 0.06 of its potential returns per unit of risk. Hecla Mining is currently generating about 0.0 per unit of risk. If you would invest  1,254  in Compania de Minas on November 28, 2024 and sell it today you would earn a total of  21.00  from holding Compania de Minas or generate 1.67% return on investment over 90 days.

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

Compania de Minas  vs.  Hecla Mining

Compania de Minas

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Compania de Minas are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Compania may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Hecla Mining

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hecla Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Hecla Mining is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Compania and Hecla Mining

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

The idea behind Compania de Minas and Hecla Mining 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.