Correlation Between Postmedia Network and Capstone Mining

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Can any of the company-specific risk be diversified away by investing in both Postmedia Network 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 Postmedia Network and Capstone Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Postmedia Network Canada and Capstone Mining Corp, you can compare the effects of market volatilities on Postmedia Network 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 Postmedia Network with a short position of Capstone Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Postmedia Network and Capstone Mining.

Diversification Opportunities for Postmedia Network and Capstone Mining

-0.39
  Correlation Coefficient

Very good diversification

The 3 months correlation between Postmedia and Capstone is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Postmedia Network Canada 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 Postmedia Network 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 Postmedia Network Canada 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 Postmedia Network i.e., Postmedia Network and Capstone Mining go up and down completely randomly.

Pair Corralation between Postmedia Network and Capstone Mining

Assuming the 90 days trading horizon Postmedia Network is expected to generate 28.92 times less return on investment than Capstone Mining. In addition to that, Postmedia Network is 1.29 times more volatile than Capstone Mining Corp. It trades about 0.0 of its total potential returns per unit of risk. Capstone Mining Corp is currently generating about 0.09 per unit of volatility. If you would invest  513.00  in Capstone Mining Corp on September 6, 2024 and sell it today you would earn a total of  428.00  from holding Capstone Mining Corp or generate 83.43% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy99.66%
ValuesDaily Returns

Postmedia Network Canada  vs.  Capstone Mining Corp

 Performance 
       Timeline  
Postmedia Network Canada 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 unfluctuating 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.
Capstone Mining Corp 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Capstone Mining Corp are ranked lower than 8 (%) 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 and Capstone Mining Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Postmedia Network and Capstone Mining

The main advantage of trading using opposite Postmedia Network and Capstone Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Postmedia Network 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 Postmedia Network Canada 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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