Correlation Between American Hotel and Capstone Mining

Can any of the company-specific risk be diversified away by investing in both American Hotel and Capstone Mining 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 American Hotel and Capstone Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between American Hotel Income and Capstone Mining Corp, you can compare the effects of market volatilities on American Hotel and Capstone Mining 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 American Hotel with a short position of Capstone Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Hotel and Capstone Mining.

Diversification Opportunities for American Hotel and Capstone Mining

0.81

Correlation Coefficient

American Hotel  Capstone Mining

Very poor diversification

The 3 months correlation between American and Capstone is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding American Hotel Income and Capstone Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capstone Mining Corp and American Hotel 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 American Hotel Income are associated (or correlated) with Capstone Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capstone Mining Corp has no effect on the direction of American Hotel i.e., American Hotel and Capstone Mining go up and down completely randomly.

Pair Corralation between American Hotel and Capstone Mining

Assuming the 90 days trading horizon American Hotel Income is expected to under-perform the Capstone Mining. In addition to that, American Hotel is 1.21 times more volatile than Capstone Mining Corp. It trades about -0.43 of its total potential returns per unit of risk. Capstone Mining Corp is currently generating about -0.29 per unit of volatility. If you would invest  1,057  in Capstone Mining Corp on September 8, 2024 and sell it today you would lose (142.00) from holding Capstone Mining Corp or give up 13.43% of portfolio value over 90 days.

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

American Hotel Income  vs.  Capstone Mining Corp

American Hotel Income

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in American Hotel Income are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, American Hotel is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Capstone Mining Corp

Risk-Adjusted Performance

6 of 100

Modest

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.

Pair Trading with American Hotel and Capstone Mining

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

The idea behind American Hotel Income and Capstone Mining Corp 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.