Correlation Between Capstone Mining and American Hotel

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Capstone Mining and American Hotel 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 American Hotel 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 American Hotel Income, you can compare the effects of market volatilities on Capstone Mining and American Hotel 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 American Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capstone Mining and American Hotel.

Diversification Opportunities for Capstone Mining and American Hotel

0.82
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Capstone and American is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Capstone Mining Corp and American Hotel Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Hotel Income 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 American Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Hotel Income has no effect on the direction of Capstone Mining i.e., Capstone Mining and American Hotel go up and down completely randomly.

Pair Corralation between Capstone Mining and American Hotel

Assuming the 90 days horizon Capstone Mining Corp is expected to generate 0.66 times more return on investment than American Hotel. However, Capstone Mining Corp is 1.51 times less risky than American Hotel. It trades about 0.11 of its potential returns per unit of risk. American Hotel Income is currently generating about 0.01 per unit of risk. If you would invest  805.00  in Capstone Mining Corp on September 6, 2024 and sell it today you would earn a total of  136.00  from holding Capstone Mining Corp or generate 16.89% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Capstone Mining Corp  vs.  American Hotel Income

 Performance 
       Timeline  
Capstone Mining Corp 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Capstone Mining Corp are ranked lower than 8 (%) 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.
American Hotel Income 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Weak
Over the last 90 days American Hotel Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, American Hotel is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Capstone Mining and American Hotel Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Capstone Mining and American Hotel

The main advantage of trading using opposite Capstone Mining and American Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capstone Mining position performs unexpectedly, American Hotel 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 American Hotel will offset losses from the drop in American Hotel's long position.
The idea behind Capstone Mining Corp and American Hotel Income 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.
Check out your portfolio center.
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

Other Complementary Tools

Portfolio Analyzer
Portfolio analysis module that provides access to portfolio diagnostics and optimization engine
Cryptocurrency Center
Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency
Competition Analyzer
Analyze and compare many basic indicators for a group of related or unrelated entities
Portfolio Rebalancing
Analyze risk-adjusted returns against different time horizons to find asset-allocation targets
Equity Forecasting
Use basic forecasting models to generate price predictions and determine price momentum