Correlation Between Capstone Mining and Thinkific Labs

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

Diversification Opportunities for Capstone Mining and Thinkific Labs

-0.36

Correlation Coefficient

Capstone Mining  Thinkific Labs

Very good diversification

The 3 months correlation between Capstone and Thinkific is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Capstone Mining Corp and Thinkific Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thinkific Labs 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 Thinkific Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thinkific Labs has no effect on the direction of Capstone Mining i.e., Capstone Mining and Thinkific Labs go up and down completely randomly.

Pair Corralation between Capstone Mining and Thinkific Labs

Assuming the 90 days horizon Capstone Mining Corp is expected to under-perform the Thinkific Labs. But the stock apears to be less risky and, when comparing its historical volatility, Capstone Mining Corp is 1.44 times less risky than Thinkific Labs. The stock trades about -0.01 of its potential returns per unit of risk. The Thinkific Labs is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  296.00  in Thinkific Labs on September 15, 2024 and sell it today you would lose (6.00) from holding Thinkific Labs or give up 2.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Capstone Mining Corp  vs.  Thinkific Labs

Capstone Mining Corp

Risk-Adjusted Performance

0 of 100

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.

Thinkific Labs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thinkific Labs has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Thinkific Labs is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Capstone Mining and Thinkific Labs

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

The idea behind Capstone Mining Corp and Thinkific Labs 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.