Correlation Between Capitan Mining and Gold79 Mines

Can any of the company-specific risk be diversified away by investing in both Capitan Mining and Gold79 Mines 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 Capitan Mining and Gold79 Mines into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Capitan Mining and Gold79 Mines, you can compare the effects of market volatilities on Capitan Mining and Gold79 Mines 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 Capitan Mining with a short position of Gold79 Mines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capitan Mining and Gold79 Mines.

Diversification Opportunities for Capitan Mining and Gold79 Mines

0.52

Correlation Coefficient

Capitan Mining  Gold79 Mines

Very weak diversification

The 3 months correlation between Capitan and Gold79 is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Capitan Mining and Gold79 Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold79 Mines and Capitan Mining 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 Capitan Mining are associated (or correlated) with Gold79 Mines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold79 Mines has no effect on the direction of Capitan Mining i.e., Capitan Mining and Gold79 Mines go up and down completely randomly.

Pair Corralation between Capitan Mining and Gold79 Mines

Assuming the 90 days horizon Capitan Mining is expected to generate 1.48 times more return on investment than Gold79 Mines. However, Capitan Mining is 1.48 times more volatile than Gold79 Mines. It trades about 0.2 of its potential returns per unit of risk. Gold79 Mines is currently generating about 0.06 per unit of risk. If you would invest  11.00  in Capitan Mining on September 14, 2024 and sell it today you would earn a total of  13.00  from holding Capitan Mining or generate 118.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Capitan Mining  vs.  Gold79 Mines

Capitan Mining

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Capitan Mining are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Capitan Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Gold79 Mines

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gold79 Mines are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Gold79 Mines reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capitan Mining and Gold79 Mines

The main advantage of trading using opposite Capitan Mining and Gold79 Mines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capitan Mining position performs unexpectedly, Gold79 Mines 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 Gold79 Mines will offset losses from the drop in Gold79 Mines' long position.

The idea behind Capitan Mining and Gold79 Mines 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.