Correlation Between Capstone Mining and Canadian Life

Can any of the company-specific risk be diversified away by investing in both Capstone Mining and Canadian Life 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 Canadian Life 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 Canadian Life Companies, you can compare the effects of market volatilities on Capstone Mining and Canadian Life 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 Canadian Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capstone Mining and Canadian Life.

Diversification Opportunities for Capstone Mining and Canadian Life

-0.77

Correlation Coefficient

Capstone Mining  Canadian Life

Pay attention - limited upside

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

Pair Corralation between Capstone Mining and Canadian Life

Assuming the 90 days horizon Capstone Mining Corp is expected to under-perform the Canadian Life. In addition to that, Capstone Mining is 6.96 times more volatile than Canadian Life Companies. It trades about -0.09 of its total potential returns per unit of risk. Canadian Life Companies is currently generating about 0.25 per unit of volatility. If you would invest  1,024  in Canadian Life Companies on September 28, 2024 and sell it today you would earn a total of  56.00  from holding Canadian Life Companies or generate 5.47% return on investment over 90 days.

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

Capstone Mining Corp  vs.  Canadian Life Companies

Capstone Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capstone Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Canadian Life Companies

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian Life Companies are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Canadian Life is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Capstone Mining and Canadian Life

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

The idea behind Capstone Mining Corp and Canadian Life Companies 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.