Correlation Between AngloGold Ashanti and Hycroft Mining

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

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

Diversification Opportunities for AngloGold Ashanti and Hycroft Mining

0.52

Correlation Coefficient

AngloGold Ashanti  Hycroft Mining

Very weak diversification

The 3 months correlation between AngloGold and Hycroft is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding AngloGold Ashanti plc 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 AngloGold Ashanti 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 AngloGold Ashanti plc 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 AngloGold Ashanti i.e., AngloGold Ashanti and Hycroft Mining go up and down completely randomly.

Pair Corralation between AngloGold Ashanti and Hycroft Mining

Allowing for the 90-day total investment horizon AngloGold Ashanti plc is expected to under-perform the Hycroft Mining. But the stock apears to be less risky and, when comparing its historical volatility, AngloGold Ashanti plc is 3.88 times less risky than Hycroft Mining. The stock trades about -0.04 of its potential returns per unit of risk. The Hycroft Mining Holding is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  2.30  in Hycroft Mining Holding on September 12, 2024 and sell it today you would lose (0.60) from holding Hycroft Mining Holding or give up 26.09% of portfolio value over 90 days.

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

AngloGold Ashanti plc  vs.  Hycroft Mining Holding

AngloGold Ashanti plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AngloGold Ashanti plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, AngloGold Ashanti is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

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. Despite quite persistent fundamental indicators, Hycroft 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 AngloGold Ashanti and Hycroft Mining

The main advantage of trading using opposite AngloGold Ashanti and Hycroft Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AngloGold Ashanti 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 AngloGold Ashanti plc 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.