Correlation Between Capella Minerals and Bravo Mining

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

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

Diversification Opportunities for Capella Minerals and Bravo Mining

0.26

Correlation Coefficient

Capella Minerals  Bravo Mining

Modest diversification

The 3 months correlation between Capella and Bravo is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Capella Minerals Limited and Bravo Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bravo Mining Corp and Capella Minerals 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 Capella Minerals Limited are associated (or correlated) with Bravo Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bravo Mining Corp has no effect on the direction of Capella Minerals i.e., Capella Minerals and Bravo Mining go up and down completely randomly.

Pair Corralation between Capella Minerals and Bravo Mining

Assuming the 90 days horizon Capella Minerals Limited is expected to generate 10.21 times more return on investment than Bravo Mining. However, Capella Minerals is 10.21 times more volatile than Bravo Mining Corp. It trades about 0.14 of its potential returns per unit of risk. Bravo Mining Corp is currently generating about 0.13 per unit of risk. If you would invest  2.23  in Capella Minerals Limited on December 29, 2024 and sell it today you would earn a total of  0.63  from holding Capella Minerals Limited or generate 28.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Capella Minerals Limited  vs.  Bravo Mining Corp

Capella Minerals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Capella Minerals Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Capella Minerals reported solid returns over the last few months and may actually be approaching a breakup point.

Bravo Mining Corp

Risk-Adjusted Performance

OK

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

Pair Trading with Capella Minerals and Bravo Mining

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

The idea behind Capella Minerals Limited and Bravo 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.