Correlation Between Capitan Mining and NorthIsle Copper

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

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

Diversification Opportunities for Capitan Mining and NorthIsle Copper

-0.2

Correlation Coefficient

Capitan Mining  NorthIsle Copper

Good diversification

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

Pair Corralation between Capitan Mining and NorthIsle Copper

Assuming the 90 days trading horizon Capitan Mining is expected to generate 1.4 times less return on investment than NorthIsle Copper. In addition to that, Capitan Mining is 1.15 times more volatile than NorthIsle Copper and. It trades about 0.04 of its total potential returns per unit of risk. NorthIsle Copper and is currently generating about 0.06 per unit of volatility. If you would invest  18.00  in NorthIsle Copper and on October 22, 2024 and sell it today you would earn a total of  28.00  from holding NorthIsle Copper and or generate 155.56% 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.  NorthIsle Copper and

Capitan Mining

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Capitan Mining are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Capitan Mining showed solid returns over the last few months and may actually be approaching a breakup point.

NorthIsle Copper

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NorthIsle Copper and are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, NorthIsle Copper may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Capitan Mining and NorthIsle Copper

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

The idea behind Capitan Mining and NorthIsle Copper and 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.