Correlation Between Hecla Mining and Compania

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

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

Diversification Opportunities for Hecla Mining and Compania

0.88

Correlation Coefficient

Hecla Mining  Compania

Very poor diversification

The 3 months correlation between Hecla and Compania is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Hecla Mining and Compania de Minas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania de Minas 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 are associated (or correlated) with Compania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compania de Minas has no effect on the direction of Hecla Mining i.e., Hecla Mining and Compania go up and down completely randomly.

Pair Corralation between Hecla Mining and Compania

Allowing for the 90-day total investment horizon Hecla Mining is expected to under-perform the Compania. In addition to that, Hecla Mining is 1.06 times more volatile than Compania de Minas. It trades about -0.5 of its total potential returns per unit of risk. Compania de Minas is currently generating about -0.16 per unit of volatility. If you would invest  1,309  in Compania de Minas on August 30, 2024 and sell it today you would lose (98.00) from holding Compania de Minas or give up 7.49% of portfolio value over 90 days.

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

Hecla Mining  vs.  Compania de Minas

Hecla Mining

Risk-Adjusted Performance

0 of 100

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.

Compania de Minas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compania de Minas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Compania is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Hecla Mining and Compania

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

The idea behind Hecla Mining and Compania de Minas 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.