Correlation Between Capstone Copper and Amerigo Resources

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

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

Diversification Opportunities for Capstone Copper and Amerigo Resources

-0.32

Correlation Coefficient

Capstone Copper  Amerigo Resources

Very good diversification

The 3 months correlation between Capstone and Amerigo is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Capstone Copper Corp and Amerigo Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amerigo Resources and Capstone Copper 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 Copper Corp are associated (or correlated) with Amerigo Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amerigo Resources has no effect on the direction of Capstone Copper i.e., Capstone Copper and Amerigo Resources go up and down completely randomly.

Pair Corralation between Capstone Copper and Amerigo Resources

Assuming the 90 days horizon Capstone Copper Corp is expected to under-perform the Amerigo Resources. In addition to that, Capstone Copper is 1.72 times more volatile than Amerigo Resources. It trades about -0.04 of its total potential returns per unit of risk. Amerigo Resources is currently generating about 0.16 per unit of volatility. If you would invest  110.00  in Amerigo Resources on December 30, 2024 and sell it today you would earn a total of  24.00  from holding Amerigo Resources or generate 21.82% return on investment over 90 days.

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

Capstone Copper Corp  vs.  Amerigo Resources

Capstone Copper Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Capstone Copper Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Amerigo Resources

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amerigo Resources are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Amerigo Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capstone Copper and Amerigo Resources

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

The idea behind Capstone Copper Corp and Amerigo Resources 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.