Correlation Between Capstone Infrastructure and Richards Packaging

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

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

Diversification Opportunities for Capstone Infrastructure and Richards Packaging

-0.18

Correlation Coefficient

Capstone Infrastructure  Richards Packaging

Good diversification

The 3 months correlation between Capstone and Richards is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Capstone Infrastructure Corp and Richards Packaging Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Richards Packaging Income and Capstone Infrastructure 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 Infrastructure Corp are associated (or correlated) with Richards Packaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Richards Packaging Income has no effect on the direction of Capstone Infrastructure i.e., Capstone Infrastructure and Richards Packaging go up and down completely randomly.

Pair Corralation between Capstone Infrastructure and Richards Packaging

Assuming the 90 days trading horizon Capstone Infrastructure Corp is expected to generate 0.49 times more return on investment than Richards Packaging. However, Capstone Infrastructure Corp is 2.05 times less risky than Richards Packaging. It trades about 0.05 of its potential returns per unit of risk. Richards Packaging Income is currently generating about 0.0 per unit of risk. If you would invest  1,436  in Capstone Infrastructure Corp on September 2, 2024 and sell it today you would earn a total of  24.00  from holding Capstone Infrastructure Corp or generate 1.67% return on investment over 90 days.

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

Capstone Infrastructure Corp  vs.  Richards Packaging Income

Capstone Infrastructure

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Capstone Infrastructure Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Capstone Infrastructure is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Richards Packaging Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Richards Packaging Income has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Richards Packaging is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Capstone Infrastructure and Richards Packaging

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

The idea behind Capstone Infrastructure Corp and Richards Packaging Income 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.