Correlation Between Plaza Retail and Capstone Mining

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

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

Diversification Opportunities for Plaza Retail and Capstone Mining

-0.51

Correlation Coefficient

Plaza Retail  Capstone Mining

Excellent diversification

The 3 months correlation between Plaza and Capstone is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Plaza Retail REIT 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 Plaza Retail 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 Plaza Retail REIT 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 Plaza Retail i.e., Plaza Retail and Capstone Mining go up and down completely randomly.

Pair Corralation between Plaza Retail and Capstone Mining

Assuming the 90 days trading horizon Plaza Retail REIT is expected to generate 0.35 times more return on investment than Capstone Mining. However, Plaza Retail REIT is 2.88 times less risky than Capstone Mining. It trades about 0.1 of its potential returns per unit of risk. Capstone Mining Corp is currently generating about -0.01 per unit of risk. If you would invest  351.00  in Plaza Retail REIT on December 23, 2024 and sell it today you would earn a total of  26.00  from holding Plaza Retail REIT or generate 7.41% return on investment over 90 days.

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

Plaza Retail REIT  vs.  Capstone Mining Corp

Plaza Retail REIT

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Plaza Retail REIT are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Plaza Retail may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Capstone Mining Corp

Risk-Adjusted Performance

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 very healthy basic indicators, Capstone Mining is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Plaza Retail and Capstone Mining

The main advantage of trading using opposite Plaza Retail and Capstone Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plaza Retail 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 Plaza Retail REIT 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.