Correlation Between Avalon Advanced and Hecla Mining

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

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

Diversification Opportunities for Avalon Advanced and Hecla Mining

0.7

Correlation Coefficient

Avalon Advanced  Hecla Mining

Poor diversification

The 3 months correlation between Avalon and Hecla is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Avalon Advanced Materials and Hecla Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hecla Mining and Avalon Advanced 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 Avalon Advanced Materials are associated (or correlated) with Hecla Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hecla Mining has no effect on the direction of Avalon Advanced i.e., Avalon Advanced and Hecla Mining go up and down completely randomly.

Pair Corralation between Avalon Advanced and Hecla Mining

If you would invest  11.00  in Avalon Advanced Materials on February 8, 2024 and sell it today you would earn a total of  0.00  from holding Avalon Advanced Materials or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	4.55%
Values	Daily Returns

Avalon Advanced Materials  vs.  Hecla Mining

Avalon Advanced Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avalon Advanced Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Avalon Advanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Hecla Mining

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hecla Mining are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal essential indicators, Hecla Mining disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Avalon Advanced and Hecla Mining

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

The idea behind Avalon Advanced Materials and Hecla Mining 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.

Check out your portfolio center.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.