Correlation Between Hycroft Mining and Friedman Industries

Can any of the company-specific risk be diversified away by investing in both Hycroft Mining and Friedman Industries 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 Friedman Industries 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 Friedman Industries, you can compare the effects of market volatilities on Hycroft Mining and Friedman Industries 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 Friedman Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hycroft Mining and Friedman Industries.

Diversification Opportunities for Hycroft Mining and Friedman Industries

0.01

Correlation Coefficient

Hycroft Mining  Friedman Industries

Significant diversification

The 3 months correlation between Hycroft and Friedman is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Hycroft Mining Holding and Friedman Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Friedman Industries 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 Friedman Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Friedman Industries has no effect on the direction of Hycroft Mining i.e., Hycroft Mining and Friedman Industries go up and down completely randomly.

Pair Corralation between Hycroft Mining and Friedman Industries

Assuming the 90 days horizon Hycroft Mining Holding is expected to generate 5.74 times more return on investment than Friedman Industries. However, Hycroft Mining is 5.74 times more volatile than Friedman Industries. It trades about 0.03 of its potential returns per unit of risk. Friedman Industries is currently generating about 0.01 per unit of risk. If you would invest  1.38  in Hycroft Mining Holding on December 2, 2024 and sell it today you would lose (0.74) from holding Hycroft Mining Holding or give up 53.62% of portfolio value over 90 days.

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

Hycroft Mining Holding  vs.  Friedman Industries

Hycroft Mining Holding

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hycroft Mining Holding are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting fundamental indicators, Hycroft Mining showed solid returns over the last few months and may actually be approaching a breakup point.

Friedman Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Friedman Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Friedman Industries is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Hycroft Mining and Friedman Industries

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

The idea behind Hycroft Mining Holding and Friedman Industries 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.