Correlation Between Capstone Mining and UnitedHealth Group

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

Diversification Opportunities for Capstone Mining and UnitedHealth Group

0.45

Correlation Coefficient

Capstone Mining  UnitedHealth Group

Very weak diversification

The 3 months correlation between Capstone and UnitedHealth is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Capstone Mining Corp and UnitedHealth Group CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UnitedHealth Group CDR 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 UnitedHealth Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UnitedHealth Group CDR has no effect on the direction of Capstone Mining i.e., Capstone Mining and UnitedHealth Group go up and down completely randomly.

Pair Corralation between Capstone Mining and UnitedHealth Group

Assuming the 90 days horizon Capstone Mining Corp is expected to under-perform the UnitedHealth Group. But the stock apears to be less risky and, when comparing its historical volatility, Capstone Mining Corp is 1.27 times less risky than UnitedHealth Group. The stock trades about -0.3 of its potential returns per unit of risk. The UnitedHealth Group CDR is currently generating about -0.22 of returns per unit of risk over similar time horizon. If you would invest  2,746  in UnitedHealth Group CDR on September 20, 2024 and sell it today you would lose (362.00) from holding UnitedHealth Group CDR or give up 13.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

Capstone Mining Corp  vs.  UnitedHealth Group CDR

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 latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

UnitedHealth Group CDR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UnitedHealth Group CDR 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 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.

Pair Trading with Capstone Mining and UnitedHealth Group

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

The idea behind Capstone Mining Corp and UnitedHealth Group CDR 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.