Correlation Between Capitan Mining and Generation Mining

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

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

Diversification Opportunities for Capitan Mining and Generation Mining

-0.19

Correlation Coefficient

Capitan Mining  Generation Mining

Good diversification

The 3 months correlation between Capitan and Generation is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Capitan Mining and Generation Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Generation Mining and Capitan 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 Capitan Mining are associated (or correlated) with Generation Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Generation Mining has no effect on the direction of Capitan Mining i.e., Capitan Mining and Generation Mining go up and down completely randomly.

Pair Corralation between Capitan Mining and Generation Mining

Assuming the 90 days trading horizon Capitan Mining is expected to generate 1.08 times more return on investment than Generation Mining. However, Capitan Mining is 1.08 times more volatile than Generation Mining. It trades about 0.03 of its potential returns per unit of risk. Generation Mining is currently generating about -0.03 per unit of risk. If you would invest  27.00  in Capitan Mining on October 21, 2024 and sell it today you would earn a total of  4.00  from holding Capitan Mining or generate 14.81% return on investment over 90 days.

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

Capitan Mining  vs.  Generation Mining

Capitan Mining

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Capitan Mining are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Capitan Mining showed solid returns over the last few months and may actually be approaching a breakup point.

Generation Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Generation Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Capitan Mining and Generation Mining

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

The idea behind Capitan Mining and Generation 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.

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..