Correlation Between Capstone Mining and Postmedia Network

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

Diversification Opportunities for Capstone Mining and Postmedia Network

-0.34

Correlation Coefficient

Capstone Mining  Postmedia Network

Very good diversification

The 3 months correlation between Capstone and Postmedia is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Capstone Mining Corp and Postmedia Network Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Postmedia Network Canada 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 Postmedia Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Postmedia Network Canada has no effect on the direction of Capstone Mining i.e., Capstone Mining and Postmedia Network go up and down completely randomly.

Pair Corralation between Capstone Mining and Postmedia Network

Assuming the 90 days horizon Capstone Mining Corp is expected to generate 0.55 times more return on investment than Postmedia Network. However, Capstone Mining Corp is 1.81 times less risky than Postmedia Network. It trades about 0.05 of its potential returns per unit of risk. Postmedia Network Canada is currently generating about 0.02 per unit of risk. If you would invest  593.00  in Capstone Mining Corp on September 7, 2024 and sell it today you would earn a total of  322.00  from holding Capstone Mining Corp or generate 54.3% return on investment over 90 days.

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

Capstone Mining Corp  vs.  Postmedia Network Canada

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.

Postmedia Network Canada

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Postmedia Network Canada has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Capstone Mining and Postmedia Network

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

The idea behind Capstone Mining Corp and Postmedia Network Canada 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.