Correlation Between GoldMining and Hudbay Minerals

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

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

Diversification Opportunities for GoldMining and Hudbay Minerals

0.0

Correlation Coefficient

GoldMining  Hudbay Minerals

Pay attention - limited upside

The 3 months correlation between GoldMining and Hudbay is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding GoldMining and Hudbay Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hudbay Minerals and GoldMining 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 GoldMining are associated (or correlated) with Hudbay Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hudbay Minerals has no effect on the direction of GoldMining i.e., GoldMining and Hudbay Minerals go up and down completely randomly.

Pair Corralation between GoldMining and Hudbay Minerals

Given the investment horizon of 90 days GoldMining is expected to generate 0.6 times more return on investment than Hudbay Minerals. However, GoldMining is 1.66 times less risky than Hudbay Minerals. It trades about 0.03 of its potential returns per unit of risk. Hudbay Minerals is currently generating about 0.0 per unit of risk. If you would invest  80.00  in GoldMining on December 29, 2024 and sell it today you would earn a total of  2.00  from holding GoldMining or generate 2.5% return on investment over 90 days.

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

GoldMining  vs.  Hudbay Minerals

GoldMining

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GoldMining are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, GoldMining is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Hudbay Minerals

Risk-Adjusted Performance

Very Weak

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

Pair Trading with GoldMining and Hudbay Minerals

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

The idea behind GoldMining and Hudbay Minerals 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.