Correlation Between Boat Rocker and Capstone Mining

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

By analyzing existing cross correlation between Boat Rocker Media and Capstone Mining Corp, you can compare the effects of market volatilities on Boat Rocker and Capstone 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 Boat Rocker with a short position of Capstone Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boat Rocker and Capstone Mining.

Diversification Opportunities for Boat Rocker and Capstone Mining

-0.43

Correlation Coefficient

Boat Rocker  Capstone Mining

Very good diversification

The 3 months correlation between Boat and Capstone is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Boat Rocker Media and Capstone Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capstone Mining Corp and Boat Rocker 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 Boat Rocker Media are associated (or correlated) with Capstone Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capstone Mining Corp has no effect on the direction of Boat Rocker i.e., Boat Rocker and Capstone Mining go up and down completely randomly.

Pair Corralation between Boat Rocker and Capstone Mining

Assuming the 90 days trading horizon Boat Rocker Media is expected to generate 0.98 times more return on investment than Capstone Mining. However, Boat Rocker Media is 1.02 times less risky than Capstone Mining. It trades about 0.08 of its potential returns per unit of risk. Capstone Mining Corp is currently generating about -0.04 per unit of risk. If you would invest  60.00  in Boat Rocker Media on December 30, 2024 and sell it today you would earn a total of  9.00  from holding Boat Rocker Media or generate 15.0% return on investment over 90 days.

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

Boat Rocker Media  vs.  Capstone Mining Corp

Boat Rocker Media

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Boat Rocker Media are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Boat Rocker displayed solid returns over the last few months and may actually be approaching a breakup point.

Capstone Mining Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Capstone Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Boat Rocker and Capstone Mining

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

The idea behind Boat Rocker Media and Capstone Mining 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.