Correlation Between Hycroft Mining and Paramount Gold

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

Diversification Opportunities for Hycroft Mining and Paramount Gold

0.68

Correlation Coefficient

Hycroft Mining  Paramount Gold

Poor diversification

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

Pair Corralation between Hycroft Mining and Paramount Gold

Given the investment horizon of 90 days Hycroft Mining Holding is expected to generate 1.31 times more return on investment than Paramount Gold. However, Hycroft Mining is 1.31 times more volatile than Paramount Gold Nevada. It trades about 0.11 of its potential returns per unit of risk. Paramount Gold Nevada is currently generating about 0.12 per unit of risk. If you would invest  228.00  in Hycroft Mining Holding on March 7, 2024 and sell it today you would earn a total of  92.00  from holding Hycroft Mining Holding or generate 40.35% return on investment over 90 days.

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

Hycroft Mining Holding  vs.  Paramount Gold Nevada

Hycroft Mining Holding

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hycroft Mining Holding are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile primary indicators, Hycroft Mining exhibited solid returns over the last few months and may actually be approaching a breakup point.

Paramount Gold Nevada

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Paramount Gold Nevada are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Paramount Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hycroft Mining and Paramount Gold

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

The idea behind Hycroft Mining Holding and Paramount Gold Nevada 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 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.