Correlation Between Capella Minerals and Clifton Mining

Can any of the company-specific risk be diversified away by investing in both Capella Minerals and Clifton 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 Clifton 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 Clifton Mining Co, you can compare the effects of market volatilities on Capella Minerals and Clifton 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 Clifton Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capella Minerals and Clifton Mining.

Diversification Opportunities for Capella Minerals and Clifton Mining

0.37

Correlation Coefficient

Capella Minerals  Clifton Mining

Weak diversification

The 3 months correlation between Capella and Clifton is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Capella Minerals Limited and Clifton Mining Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clifton Mining 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 Clifton Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clifton Mining has no effect on the direction of Capella Minerals i.e., Capella Minerals and Clifton Mining go up and down completely randomly.

Pair Corralation between Capella Minerals and Clifton Mining

Assuming the 90 days horizon Capella Minerals is expected to generate 4.91 times less return on investment than Clifton Mining. But when comparing it to its historical volatility, Capella Minerals Limited is 1.5 times less risky than Clifton Mining. It trades about 0.01 of its potential returns per unit of risk. Clifton Mining Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  5.00  in Clifton Mining Co on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Clifton Mining Co or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Capella Minerals Limited  vs.  Clifton Mining Co

Capella Minerals

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Capella Minerals Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Capella Minerals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Clifton Mining

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Clifton Mining Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Clifton Mining displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capella Minerals and Clifton Mining

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

The idea behind Capella Minerals Limited and Clifton Mining Co 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.