Correlation Between Hecla Mining and Ramaco Resources

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

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

Diversification Opportunities for Hecla Mining and Ramaco Resources

-0.48

Correlation Coefficient

Hecla Mining  Ramaco Resources

Very good diversification

The 3 months correlation between Hecla and Ramaco is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Hecla Mining and Ramaco Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ramaco Resources and Hecla 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 Hecla Mining are associated (or correlated) with Ramaco Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ramaco Resources has no effect on the direction of Hecla Mining i.e., Hecla Mining and Ramaco Resources go up and down completely randomly.

Pair Corralation between Hecla Mining and Ramaco Resources

Allowing for the 90-day total investment horizon Hecla Mining is expected to generate 8.75 times less return on investment than Ramaco Resources. But when comparing it to its historical volatility, Hecla Mining is 1.18 times less risky than Ramaco Resources. It trades about 0.01 of its potential returns per unit of risk. Ramaco Resources is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,085  in Ramaco Resources on September 4, 2024 and sell it today you would earn a total of  133.00  from holding Ramaco Resources or generate 12.26% return on investment over 90 days.

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

Hecla Mining  vs.  Ramaco Resources

Hecla Mining

Risk-Adjusted Performance

0 of 100

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.

Ramaco Resources

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ramaco Resources are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Ramaco Resources exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hecla Mining and Ramaco Resources

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

The idea behind Hecla Mining and Ramaco Resources 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..