Correlation Between Capitan Mining and Roscan Gold

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

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

Diversification Opportunities for Capitan Mining and Roscan Gold

-0.73

Correlation Coefficient

Capitan Mining  Roscan Gold

Pay attention - limited upside

The 3 months correlation between Capitan and Roscan is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Capitan Mining and Roscan Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roscan Gold Corp 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 Roscan Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roscan Gold Corp has no effect on the direction of Capitan Mining i.e., Capitan Mining and Roscan Gold go up and down completely randomly.

Pair Corralation between Capitan Mining and Roscan Gold

Assuming the 90 days trading horizon Capitan Mining is expected to under-perform the Roscan Gold. But the stock apears to be less risky and, when comparing its historical volatility, Capitan Mining is 1.12 times less risky than Roscan Gold. The stock trades about -0.13 of its potential returns per unit of risk. The Roscan Gold Corp is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  8.00  in Roscan Gold Corp on September 21, 2024 and sell it today you would lose (1.00) from holding Roscan Gold Corp or give up 12.5% of portfolio value over 90 days.

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

Capitan Mining  vs.  Roscan Gold Corp

Capitan Mining

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Capitan Mining are ranked lower than 16 (%) 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.

Roscan Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Roscan Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Capitan Mining and Roscan Gold

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

The idea behind Capitan Mining and Roscan Gold 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.