Correlation Between Hycroft Mining and HighPeak Energy

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

Diversification Opportunities for Hycroft Mining and HighPeak Energy

0.66

Correlation Coefficient

Hycroft Mining  HighPeak Energy

Poor diversification

The 3 months correlation between Hycroft and HighPeak is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Hycroft Mining Holding and HighPeak Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HighPeak Energy 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 HighPeak Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HighPeak Energy has no effect on the direction of Hycroft Mining i.e., Hycroft Mining and HighPeak Energy go up and down completely randomly.

Pair Corralation between Hycroft Mining and HighPeak Energy

Assuming the 90 days horizon Hycroft Mining Holding is expected to generate 2.63 times more return on investment than HighPeak Energy. However, Hycroft Mining is 2.63 times more volatile than HighPeak Energy. It trades about 0.02 of its potential returns per unit of risk. HighPeak Energy is currently generating about -0.15 per unit of risk. If you would invest  1.50  in Hycroft Mining Holding on November 28, 2024 and sell it today you would lose (0.82) from holding Hycroft Mining Holding or give up 54.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.31%
Values	Daily Returns

Hycroft Mining Holding  vs.  HighPeak Energy

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 1 (%) 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.

HighPeak Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days HighPeak Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's technical and fundamental indicators remain fairly stable which may send shares a bit higher in March 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Hycroft Mining and HighPeak Energy

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

The idea behind Hycroft Mining Holding and HighPeak Energy 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.