Correlation Between Capstone Mining and UPS CDR

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

Diversification Opportunities for Capstone Mining and UPS CDR

0.28

Correlation Coefficient

Capstone Mining  UPS CDR

Modest diversification

The 3 months correlation between Capstone and UPS is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Capstone Mining Corp and UPS CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UPS CDR 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 UPS CDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UPS CDR has no effect on the direction of Capstone Mining i.e., Capstone Mining and UPS CDR go up and down completely randomly.

Pair Corralation between Capstone Mining and UPS CDR

Assuming the 90 days horizon Capstone Mining Corp is expected to generate 1.65 times more return on investment than UPS CDR. However, Capstone Mining is 1.65 times more volatile than UPS CDR. It trades about -0.04 of its potential returns per unit of risk. UPS CDR is currently generating about -0.08 per unit of risk. If you would invest  873.00  in Capstone Mining Corp on December 29, 2024 and sell it today you would lose (100.00) from holding Capstone Mining Corp or give up 11.45% of portfolio value over 90 days.

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

Capstone Mining Corp  vs.  UPS CDR

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 unfluctuating 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.

UPS CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days UPS CDR 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.

Pair Trading with Capstone Mining and UPS CDR

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

The idea behind Capstone Mining Corp and UPS CDR 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.