Correlation Between GoldMining and Hycroft Mining

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

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

Diversification Opportunities for GoldMining and Hycroft Mining

0.87

Correlation Coefficient

GoldMining  Hycroft Mining

Very poor diversification

The 3 months correlation between GoldMining and Hycroft is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding GoldMining and Hycroft Mining Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hycroft Mining Holding 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 Hycroft Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hycroft Mining Holding has no effect on the direction of GoldMining i.e., GoldMining and Hycroft Mining go up and down completely randomly.

Pair Corralation between GoldMining and Hycroft Mining

Given the investment horizon of 90 days GoldMining is expected to generate 0.24 times more return on investment than Hycroft Mining. However, GoldMining is 4.11 times less risky than Hycroft Mining. It trades about -0.01 of its potential returns per unit of risk. Hycroft Mining Holding is currently generating about -0.07 per unit of risk. If you would invest  84.00  in GoldMining on October 5, 2024 and sell it today you would lose (1.00) from holding GoldMining or give up 1.19% of portfolio value over 90 days.

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

GoldMining  vs.  Hycroft Mining Holding

GoldMining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GoldMining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Hycroft Mining Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hycroft Mining Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with GoldMining and Hycroft Mining

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

The idea behind GoldMining and Hycroft Mining Holding 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.