Correlation Between Honey Badger and Capella Minerals

Can any of the company-specific risk be diversified away by investing in both Honey Badger and Capella Minerals 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 Honey Badger and Capella Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Honey Badger Silver and Capella Minerals Limited, you can compare the effects of market volatilities on Honey Badger and Capella Minerals 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 Honey Badger with a short position of Capella Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Honey Badger and Capella Minerals.

Diversification Opportunities for Honey Badger and Capella Minerals

-0.5

Correlation Coefficient

Honey Badger  Capella Minerals

Very good diversification

The 3 months correlation between Honey and Capella is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Honey Badger Silver and Capella Minerals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capella Minerals and Honey Badger 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 Honey Badger Silver are associated (or correlated) with Capella Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capella Minerals has no effect on the direction of Honey Badger i.e., Honey Badger and Capella Minerals go up and down completely randomly.

Pair Corralation between Honey Badger and Capella Minerals

Assuming the 90 days horizon Honey Badger Silver is expected to generate 1.2 times more return on investment than Capella Minerals. However, Honey Badger is 1.2 times more volatile than Capella Minerals Limited. It trades about 0.13 of its potential returns per unit of risk. Capella Minerals Limited is currently generating about 0.01 per unit of risk. If you would invest  5.16  in Honey Badger Silver on September 2, 2024 and sell it today you would earn a total of  2.78  from holding Honey Badger Silver or generate 53.88% return on investment over 90 days.

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

Honey Badger Silver  vs.  Capella Minerals Limited

Honey Badger Silver

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Honey Badger Silver are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward indicators, Honey Badger reported solid returns over the last few months and may actually be approaching a breakup point.

Capella Minerals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Capella Minerals Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Capella Minerals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Honey Badger and Capella Minerals

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

The idea behind Honey Badger Silver and Capella Minerals Limited 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.