Correlation Between Capstone Mining and Enduro Metals

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

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

Diversification Opportunities for Capstone Mining and Enduro Metals

-0.07

Correlation Coefficient

Capstone Mining  Enduro Metals

Good diversification

The 3 months correlation between Capstone and Enduro is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Capstone Mining Corp and Enduro Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enduro Metals Corp and Capstone 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 Capstone Mining Corp are associated (or correlated) with Enduro Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enduro Metals Corp has no effect on the direction of Capstone Mining i.e., Capstone Mining and Enduro Metals go up and down completely randomly.

Pair Corralation between Capstone Mining and Enduro Metals

Assuming the 90 days horizon Capstone Mining Corp is expected to generate 0.55 times more return on investment than Enduro Metals. However, Capstone Mining Corp is 1.82 times less risky than Enduro Metals. It trades about 0.08 of its potential returns per unit of risk. Enduro Metals Corp is currently generating about -0.06 per unit of risk. If you would invest  859.00  in Capstone Mining Corp on September 2, 2024 and sell it today you would earn a total of  109.00  from holding Capstone Mining Corp or generate 12.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Capstone Mining Corp  vs.  Enduro Metals Corp

Capstone Mining Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Capstone Mining Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Capstone Mining displayed solid returns over the last few months and may actually be approaching a breakup point.

Enduro Metals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enduro Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's fundamental 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 Capstone Mining and Enduro Metals

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

The idea behind Capstone Mining Corp and Enduro Metals 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.