Correlation Between Cornish Metals and Capital Drilling

Can any of the company-specific risk be diversified away by investing in both Cornish Metals and Capital Drilling 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 Cornish Metals and Capital Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cornish Metals and Capital Drilling, you can compare the effects of market volatilities on Cornish Metals and Capital Drilling 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 Cornish Metals with a short position of Capital Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cornish Metals and Capital Drilling.

Diversification Opportunities for Cornish Metals and Capital Drilling

-0.13

Correlation Coefficient

Cornish Metals  Capital Drilling

Good diversification

The 3 months correlation between Cornish and Capital is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Cornish Metals and Capital Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Drilling and Cornish Metals 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 Cornish Metals are associated (or correlated) with Capital Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Drilling has no effect on the direction of Cornish Metals i.e., Cornish Metals and Capital Drilling go up and down completely randomly.

Pair Corralation between Cornish Metals and Capital Drilling

Assuming the 90 days trading horizon Cornish Metals is expected to generate 0.64 times more return on investment than Capital Drilling. However, Cornish Metals is 1.56 times less risky than Capital Drilling. It trades about 0.09 of its potential returns per unit of risk. Capital Drilling is currently generating about -0.18 per unit of risk. If you would invest  865.00  in Cornish Metals on October 23, 2024 and sell it today you would earn a total of  25.00  from holding Cornish Metals or generate 2.89% return on investment over 90 days.

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

Cornish Metals  vs.  Capital Drilling

Cornish Metals

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cornish Metals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Cornish Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Capital Drilling

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Capital Drilling has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Cornish Metals and Capital Drilling

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

The idea behind Cornish Metals and Capital Drilling 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.