Correlation Between Capstone Mining and HudBay Minerals

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

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

Diversification Opportunities for Capstone Mining and HudBay Minerals

0.77

Correlation Coefficient

Capstone Mining  HudBay Minerals

Poor diversification

The 3 months correlation between Capstone and HudBay is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Capstone Mining Corp and HudBay Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HudBay Minerals and Capstone 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 Capstone Mining Corp are associated (or correlated) with HudBay Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HudBay Minerals has no effect on the direction of Capstone Mining i.e., Capstone Mining and HudBay Minerals go up and down completely randomly.

Pair Corralation between Capstone Mining and HudBay Minerals

Assuming the 90 days horizon Capstone Mining is expected to generate 1.53 times less return on investment than HudBay Minerals. In addition to that, Capstone Mining is 1.08 times more volatile than HudBay Minerals. It trades about 0.07 of its total potential returns per unit of risk. HudBay Minerals is currently generating about 0.11 per unit of volatility. If you would invest  993.00  in HudBay Minerals on September 5, 2024 and sell it today you would earn a total of  263.00  from holding HudBay Minerals or generate 26.49% return on investment over 90 days.

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

Capstone Mining Corp  vs.  HudBay Minerals

Capstone Mining Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Capstone Mining Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Capstone Mining displayed solid returns over the last few months and may actually be approaching a breakup point.

HudBay Minerals

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HudBay Minerals are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, HudBay Minerals displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capstone Mining and HudBay Minerals

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

The idea behind Capstone Mining Corp and HudBay Minerals 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.