Correlation Between Capstone Mining and Metalero Mining

Can any of the company-specific risk be diversified away by investing in both Capstone Mining and Metalero 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 Capstone Mining and Metalero Mining 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 Metalero Mining Corp, you can compare the effects of market volatilities on Capstone Mining and Metalero 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 Capstone Mining with a short position of Metalero Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capstone Mining and Metalero Mining.

Diversification Opportunities for Capstone Mining and Metalero Mining

0.38

Correlation Coefficient

Capstone Mining  Metalero Mining

Weak diversification

The 3 months correlation between Capstone and Metalero is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Capstone Mining Corp and Metalero Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalero Mining 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 Metalero Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalero Mining Corp has no effect on the direction of Capstone Mining i.e., Capstone Mining and Metalero Mining go up and down completely randomly.

Pair Corralation between Capstone Mining and Metalero Mining

Assuming the 90 days horizon Capstone Mining Corp is expected to under-perform the Metalero Mining. But the stock apears to be less risky and, when comparing its historical volatility, Capstone Mining Corp is 2.05 times less risky than Metalero Mining. The stock trades about -0.04 of its potential returns per unit of risk. The Metalero Mining Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Metalero Mining Corp on December 30, 2024 and sell it today you would earn a total of  1.00  from holding Metalero Mining Corp or generate 7.14% return on investment over 90 days.

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

Capstone Mining Corp  vs.  Metalero Mining Corp

Capstone Mining Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Capstone Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Metalero Mining Corp

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Capstone Mining and Metalero Mining

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

The idea behind Capstone Mining Corp and Metalero 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 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.