Correlation Between Capstone Mining and Sun Peak

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

Diversification Opportunities for Capstone Mining and Sun Peak

0.22

Correlation Coefficient

Capstone Mining  Sun Peak

Modest diversification

The 3 months correlation between Capstone and Sun is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Capstone Mining Corp and Sun Peak Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Peak Metals 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 Sun Peak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Peak Metals has no effect on the direction of Capstone Mining i.e., Capstone Mining and Sun Peak go up and down completely randomly.

Pair Corralation between Capstone Mining and Sun Peak

Assuming the 90 days horizon Capstone Mining Corp is expected to generate 0.68 times more return on investment than Sun Peak. However, Capstone Mining Corp is 1.48 times less risky than Sun Peak. It trades about 0.01 of its potential returns per unit of risk. Sun Peak Metals is currently generating about 0.0 per unit of risk. If you would invest  905.00  in Capstone Mining Corp on December 21, 2024 and sell it today you would lose (14.00) from holding Capstone Mining Corp or give up 1.55% of portfolio value over 90 days.

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

Capstone Mining Corp  vs.  Sun Peak Metals

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 very healthy basic indicators, Capstone Mining is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Sun Peak Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sun Peak Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Sun Peak is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Capstone Mining and Sun Peak

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

The idea behind Capstone Mining Corp and Sun Peak Metals 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..