Correlation Between Hycroft Mining and Paramount Gold

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

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

Diversification Opportunities for Hycroft Mining and Paramount Gold

0.82

Correlation Coefficient

Hycroft Mining  Paramount Gold

Very poor diversification

The 3 months correlation between Hycroft and Paramount is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Hycroft Mining Holding and Paramount Gold Nevada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paramount Gold Nevada and Hycroft 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 Hycroft Mining Holding are associated (or correlated) with Paramount Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paramount Gold Nevada has no effect on the direction of Hycroft Mining i.e., Hycroft Mining and Paramount Gold go up and down completely randomly.

Pair Corralation between Hycroft Mining and Paramount Gold

Assuming the 90 days horizon Hycroft Mining Holding is expected to under-perform the Paramount Gold. In addition to that, Hycroft Mining is 3.82 times more volatile than Paramount Gold Nevada. It trades about -0.04 of its total potential returns per unit of risk. Paramount Gold Nevada is currently generating about -0.03 per unit of volatility. If you would invest  37.00  in Paramount Gold Nevada on October 8, 2024 and sell it today you would lose (1.00) from holding Paramount Gold Nevada or give up 2.7% of portfolio value over 90 days.

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

Hycroft Mining Holding  vs.  Paramount Gold Nevada

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.

Paramount Gold Nevada

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Paramount Gold Nevada has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Hycroft Mining and Paramount Gold

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

The idea behind Hycroft Mining Holding and Paramount Gold Nevada 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.