Correlation Between Hycroft Mining and Dakota Gold

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

Diversification Opportunities for Hycroft Mining and Dakota Gold

0.2

Correlation Coefficient

Hycroft Mining  Dakota Gold

Modest diversification

The 3 months correlation between Hycroft and Dakota is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Hycroft Mining Holding and Dakota Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dakota Gold Corp 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 Dakota Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dakota Gold Corp has no effect on the direction of Hycroft Mining i.e., Hycroft Mining and Dakota Gold go up and down completely randomly.

Pair Corralation between Hycroft Mining and Dakota Gold

Assuming the 90 days horizon Hycroft Mining Holding is expected to generate 4.3 times more return on investment than Dakota Gold. However, Hycroft Mining is 4.3 times more volatile than Dakota Gold Corp. It trades about 0.05 of its potential returns per unit of risk. Dakota Gold Corp is currently generating about 0.0 per unit of risk. If you would invest  6.20  in Hycroft Mining Holding on September 12, 2024 and sell it today you would lose (4.83) from holding Hycroft Mining Holding or give up 77.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.79%
Values	Daily Returns

Hycroft Mining Holding  vs.  Dakota Gold Corp

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. In spite of fairly abnormal fundamental indicators, Hycroft Mining may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Dakota Gold Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dakota Gold Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Dakota Gold is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Hycroft Mining and Dakota Gold

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

The idea behind Hycroft Mining Holding and Dakota Gold Corp 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.