Correlation Between Hycroft Mining and Alamos Gold

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

Diversification Opportunities for Hycroft Mining and Alamos Gold

0.37

Correlation Coefficient

Hycroft Mining  Alamos Gold

Weak diversification

The 3 months correlation between Hycroft and Alamos is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Hycroft Mining Holding and Alamos Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alamos Gold 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 Alamos Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alamos Gold has no effect on the direction of Hycroft Mining i.e., Hycroft Mining and Alamos Gold go up and down completely randomly.

Pair Corralation between Hycroft Mining and Alamos Gold

Assuming the 90 days horizon Hycroft Mining Holding is expected to under-perform the Alamos Gold. In addition to that, Hycroft Mining is 4.61 times more volatile than Alamos Gold. It trades about -0.12 of its total potential returns per unit of risk. Alamos Gold is currently generating about 0.25 per unit of volatility. If you would invest  1,816  in Alamos Gold on September 12, 2024 and sell it today you would earn a total of  208.00  from holding Alamos Gold or generate 11.45% return on investment over 90 days.

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

Hycroft Mining Holding  vs.  Alamos Gold

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.

Alamos Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alamos Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Alamos Gold is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Hycroft Mining and Alamos Gold

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

The idea behind Hycroft Mining Holding and Alamos Gold 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.