Correlation Between New Pacific and Hecla Mining

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

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

Diversification Opportunities for New Pacific and Hecla Mining

0.18

Correlation Coefficient

New Pacific  Hecla Mining

Average diversification

The 3 months correlation between New and Hecla is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding New Pacific Metals and Hecla Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hecla Mining and New Pacific 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 New Pacific Metals are associated (or correlated) with Hecla Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hecla Mining has no effect on the direction of New Pacific i.e., New Pacific and Hecla Mining go up and down completely randomly.

Pair Corralation between New Pacific and Hecla Mining

Given the investment horizon of 90 days New Pacific Metals is expected to under-perform the Hecla Mining. But the stock apears to be less risky and, when comparing its historical volatility, New Pacific Metals is 1.14 times less risky than Hecla Mining. The stock trades about -0.04 of its potential returns per unit of risk. The Hecla Mining is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  533.00  in Hecla Mining on November 28, 2024 and sell it today you would lose (9.00) from holding Hecla Mining or give up 1.69% of portfolio value over 90 days.

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

New Pacific Metals  vs.  Hecla Mining

New Pacific Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days New Pacific Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in March 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Hecla Mining

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hecla Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Hecla Mining is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with New Pacific and Hecla Mining

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

The idea behind New Pacific Metals and Hecla Mining 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.