Correlation Between Sun Peak and Capstone Mining

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

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

Diversification Opportunities for Sun Peak and Capstone Mining

0.69

Correlation Coefficient

Sun Peak  Capstone Mining

Poor diversification

The 3 months correlation between Sun and Capstone is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Sun Peak Metals and Capstone Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capstone Mining Corp and Sun Peak 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 Sun Peak Metals are associated (or correlated) with Capstone Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capstone Mining Corp has no effect on the direction of Sun Peak i.e., Sun Peak and Capstone Mining go up and down completely randomly.

Pair Corralation between Sun Peak and Capstone Mining

Assuming the 90 days trading horizon Sun Peak Metals is expected to generate 1.94 times more return on investment than Capstone Mining. However, Sun Peak is 1.94 times more volatile than Capstone Mining Corp. It trades about 0.03 of its potential returns per unit of risk. Capstone Mining Corp is currently generating about 0.04 per unit of risk. If you would invest  30.00  in Sun Peak Metals on October 24, 2024 and sell it today you would earn a total of  0.00  from holding Sun Peak Metals or generate 0.0% return on investment over 90 days.

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

Sun Peak Metals  vs.  Capstone Mining Corp

Sun Peak Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sun Peak Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Capstone Mining Corp

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with Sun Peak and Capstone Mining

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

The idea behind Sun Peak Metals and Capstone Mining Corp 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.