Correlation Between Capstone Mining and PJX Resources

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

Diversification Opportunities for Capstone Mining and PJX Resources

0.01

Correlation Coefficient

Capstone Mining  PJX Resources

Significant diversification

The 3 months correlation between Capstone and PJX is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Capstone Mining Corp and PJX Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PJX Resources 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 PJX Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PJX Resources has no effect on the direction of Capstone Mining i.e., Capstone Mining and PJX Resources go up and down completely randomly.

Pair Corralation between Capstone Mining and PJX Resources

Assuming the 90 days horizon Capstone Mining is expected to generate 1.94 times less return on investment than PJX Resources. But when comparing it to its historical volatility, Capstone Mining Corp is 2.37 times less risky than PJX Resources. It trades about 0.05 of its potential returns per unit of risk. PJX Resources is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  10.00  in PJX Resources on September 7, 2024 and sell it today you would earn a total of  1.00  from holding PJX Resources or generate 10.0% return on investment over 90 days.

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

Capstone Mining Corp  vs.  PJX Resources

Capstone Mining Corp

Risk-Adjusted Performance

6 of 100

OK

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.

PJX Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PJX Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Capstone Mining and PJX Resources

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

The idea behind Capstone Mining Corp and PJX Resources 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.