Correlation Between Arctic Star and Capella Minerals
Can any of the company-specific risk be diversified away by investing in both Arctic Star 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 Arctic Star and Capella Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arctic Star Exploration and Capella Minerals Limited, you can compare the effects of market volatilities on Arctic Star 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 Arctic Star with a short position of Capella Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arctic Star and Capella Minerals.
Diversification Opportunities for Arctic Star and Capella Minerals
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Arctic and Capella is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Arctic Star Exploration and Capella Minerals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capella Minerals and Arctic Star 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 Arctic Star Exploration 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 Arctic Star i.e., Arctic Star and Capella Minerals go up and down completely randomly.
Pair Corralation between Arctic Star and Capella Minerals
Assuming the 90 days horizon Arctic Star Exploration is expected to generate 2.16 times more return on investment than Capella Minerals. However, Arctic Star is 2.16 times more volatile than Capella Minerals Limited. It trades about -0.03 of its potential returns per unit of risk. Capella Minerals Limited is currently generating about -0.09 per unit of risk. If you would invest 0.94 in Arctic Star Exploration on August 29, 2024 and sell it today you would lose (0.07) from holding Arctic Star Exploration or give up 7.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Arctic Star Exploration vs. Capella Minerals Limited
Performance |
| Timeline |
| Arctic Star Exploration |
| Capella Minerals |
Arctic Star and Capella Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arctic Star and Capella Minerals
The main advantage of trading using opposite Arctic Star and Capella Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arctic Star 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 Arctic Star Exploration 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.| Capella Minerals vs. Mirasol Resources | Capella Minerals vs. Clean Air Metals | Capella Minerals vs. Equity Metals |
Check out your portfolio center.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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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