Correlation Between Capella Minerals and Metallic Minerals

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

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

Diversification Opportunities for Capella Minerals and Metallic Minerals

0.05

Correlation Coefficient

Capella Minerals  Metallic Minerals

Significant diversification

The 3 months correlation between Capella and Metallic is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Capella Minerals Limited and Metallic Minerals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metallic Minerals Corp and Capella 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 Capella Minerals Limited are associated (or correlated) with Metallic Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metallic Minerals Corp has no effect on the direction of Capella Minerals i.e., Capella Minerals and Metallic Minerals go up and down completely randomly.

Pair Corralation between Capella Minerals and Metallic Minerals

Assuming the 90 days horizon Capella Minerals Limited is expected to generate 0.81 times more return on investment than Metallic Minerals. However, Capella Minerals Limited is 1.23 times less risky than Metallic Minerals. It trades about 0.01 of its potential returns per unit of risk. Metallic Minerals Corp is currently generating about -0.05 per unit of risk. If you would invest  0.74  in Capella Minerals Limited on September 2, 2024 and sell it today you would lose (0.05) from holding Capella Minerals Limited or give up 6.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Capella Minerals Limited  vs.  Metallic Minerals Corp

Capella Minerals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Capella Minerals Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Capella Minerals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Metallic Minerals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Metallic Minerals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Capella Minerals and Metallic Minerals

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

The idea behind Capella Minerals Limited and Metallic Minerals 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.