Correlation Between HighPeak Energy and Hycroft Mining

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

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

Diversification Opportunities for HighPeak Energy and Hycroft Mining

-0.34

Correlation Coefficient

HighPeak Energy  Hycroft Mining

Very good diversification

The 3 months correlation between HighPeak and Hycroft is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding HighPeak Energy 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 HighPeak Energy 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 HighPeak Energy 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 HighPeak Energy i.e., HighPeak Energy and Hycroft Mining go up and down completely randomly.

Pair Corralation between HighPeak Energy and Hycroft Mining

Assuming the 90 days horizon HighPeak Energy is expected to generate 1.05 times more return on investment than Hycroft Mining. However, HighPeak Energy is 1.05 times more volatile than Hycroft Mining Holding. It trades about 0.07 of its potential returns per unit of risk. Hycroft Mining Holding is currently generating about 0.01 per unit of risk. If you would invest  452.00  in HighPeak Energy on September 2, 2024 and sell it today you would earn a total of  87.00  from holding HighPeak Energy or generate 19.25% return on investment over 90 days.

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

HighPeak Energy  vs.  Hycroft Mining Holding

HighPeak Energy

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in HighPeak Energy are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal technical and fundamental indicators, HighPeak Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Hycroft Mining Holding

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Hycroft Mining Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Hycroft 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 HighPeak Energy and Hycroft Mining

The main advantage of trading using opposite HighPeak Energy and Hycroft Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HighPeak Energy 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 HighPeak Energy 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.