Correlation Between Kinross Gold and Hycroft Mining

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

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

Diversification Opportunities for Kinross Gold and Hycroft Mining

0.3

Correlation Coefficient

Kinross Gold  Hycroft Mining

Weak diversification

The 3 months correlation between Kinross and Hycroft is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Kinross Gold 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 Kinross Gold 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 Kinross Gold 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 Kinross Gold i.e., Kinross Gold and Hycroft Mining go up and down completely randomly.

Pair Corralation between Kinross Gold and Hycroft Mining

Considering the 90-day investment horizon Kinross Gold is expected to generate 5.8 times less return on investment than Hycroft Mining. But when comparing it to its historical volatility, Kinross Gold is 5.25 times less risky than Hycroft Mining. It trades about 0.03 of its potential returns per unit of risk. Hycroft Mining Holding is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1.47  in Hycroft Mining Holding on October 8, 2024 and sell it today you would lose (0.42) from holding Hycroft Mining Holding or give up 28.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.55%
Values	Daily Returns

Kinross Gold  vs.  Hycroft Mining Holding

Kinross Gold

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kinross Gold are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Kinross Gold is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Hycroft Mining Holding

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hycroft Mining Holding are ranked lower than 3 (%) 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.

Pair Trading with Kinross Gold and Hycroft Mining

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

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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.