Correlation Between Hycroft Mining and Seabridge Gold

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

Diversification Opportunities for Hycroft Mining and Seabridge Gold

0.68

Correlation Coefficient

Hycroft Mining  Seabridge Gold

Poor diversification

The 3 months correlation between Hycroft and Seabridge is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Hycroft Mining Holding and Seabridge Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seabridge 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 Seabridge Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seabridge Gold has no effect on the direction of Hycroft Mining i.e., Hycroft Mining and Seabridge Gold go up and down completely randomly.

Pair Corralation between Hycroft Mining and Seabridge Gold

Assuming the 90 days horizon Hycroft Mining Holding is expected to generate 3.66 times more return on investment than Seabridge Gold. However, Hycroft Mining is 3.66 times more volatile than Seabridge Gold. It trades about 0.0 of its potential returns per unit of risk. Seabridge Gold is currently generating about -0.13 per unit of risk. 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	Significant
Accuracy	100.0%
Values	Daily Returns

Hycroft Mining Holding  vs.  Seabridge 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.

Seabridge Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seabridge Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Hycroft Mining and Seabridge Gold

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

The idea behind Hycroft Mining Holding and Seabridge 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.