Correlation Between Strikepoint Gold and Capitan Mining

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

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

Diversification Opportunities for Strikepoint Gold and Capitan Mining

-0.06

Correlation Coefficient

Strikepoint Gold  Capitan Mining

Good diversification

The 3 months correlation between Strikepoint and Capitan is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Strikepoint Gold and Capitan Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitan Mining and Strikepoint Gold 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 Strikepoint Gold are associated (or correlated) with Capitan Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitan Mining has no effect on the direction of Strikepoint Gold i.e., Strikepoint Gold and Capitan Mining go up and down completely randomly.

Pair Corralation between Strikepoint Gold and Capitan Mining

Assuming the 90 days horizon Strikepoint Gold is expected to generate 2.23 times more return on investment than Capitan Mining. However, Strikepoint Gold is 2.23 times more volatile than Capitan Mining. It trades about -0.06 of its potential returns per unit of risk. Capitan Mining is currently generating about -0.14 per unit of risk. If you would invest  23.00  in Strikepoint Gold on September 22, 2024 and sell it today you would lose (5.00) from holding Strikepoint Gold or give up 21.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Strikepoint Gold  vs.  Capitan Mining

Strikepoint Gold

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Strikepoint Gold are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Strikepoint Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Capitan Mining

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Capitan Mining are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Capitan Mining showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Strikepoint Gold and Capitan Mining

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

The idea behind Strikepoint Gold and Capitan Mining 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.