Correlation Between Hycroft Mining and Universal Stainless

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

Diversification Opportunities for Hycroft Mining and Universal Stainless

-0.44

Correlation Coefficient

Hycroft Mining  Universal Stainless

Very good diversification

The 3 months correlation between Hycroft and Universal is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Hycroft Mining Holding and Universal Stainless Alloy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Stainless Alloy 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 Universal Stainless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Stainless Alloy has no effect on the direction of Hycroft Mining i.e., Hycroft Mining and Universal Stainless go up and down completely randomly.

Pair Corralation between Hycroft Mining and Universal Stainless

Assuming the 90 days horizon Hycroft Mining Holding is expected to generate 4.61 times more return on investment than Universal Stainless. However, Hycroft Mining is 4.61 times more volatile than Universal Stainless Alloy. It trades about 0.05 of its potential returns per unit of risk. Universal Stainless Alloy is currently generating about 0.12 per unit of risk. If you would invest  4.60  in Hycroft Mining Holding on October 1, 2024 and sell it today you would lose (3.79) from holding Hycroft Mining Holding or give up 82.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.74%
Values	Daily Returns

Hycroft Mining Holding  vs.  Universal Stainless Alloy

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. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Universal Stainless Alloy

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Stainless Alloy are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Universal Stainless may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Hycroft Mining and Universal Stainless

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

The idea behind Hycroft Mining Holding and Universal Stainless Alloy 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.