Correlation Between Metallic Minerals and Capella Minerals

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

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

Diversification Opportunities for Metallic Minerals and Capella Minerals

0.28

Correlation Coefficient

Metallic Minerals  Capella Minerals

Modest diversification

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

Pair Corralation between Metallic Minerals and Capella Minerals

Assuming the 90 days horizon Metallic Minerals is expected to generate 8.8 times less return on investment than Capella Minerals. But when comparing it to its historical volatility, Metallic Minerals Corp is 11.95 times less risky than Capella Minerals. It trades about 0.19 of its potential returns per unit of risk. Capella Minerals Limited is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  2.23  in Capella Minerals Limited on December 30, 2024 and sell it today you would earn a total of  0.63  from holding Capella Minerals Limited or generate 28.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Metallic Minerals Corp  vs.  Capella Minerals Limited

Metallic Minerals Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Metallic Minerals Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Metallic Minerals reported solid returns over the last few months and may actually be approaching a breakup point.

Capella Minerals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Capella Minerals Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Capella Minerals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Metallic Minerals and Capella Minerals

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

The idea behind Metallic Minerals Corp and Capella Minerals Limited 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 Stocks Directory module to find actively traded stocks across global markets.