Correlation Between Capstone Mining and South Pacific
Can any of the company-specific risk be diversified away by investing in both Capstone Mining and South Pacific 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 South Pacific 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 South Pacific Metals, you can compare the effects of market volatilities on Capstone Mining and South Pacific 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 South Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capstone Mining and South Pacific.
Diversification Opportunities for Capstone Mining and South Pacific
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Capstone and South is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Capstone Mining Corp and South Pacific Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South Pacific Metals 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 South Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South Pacific Metals has no effect on the direction of Capstone Mining i.e., Capstone Mining and South Pacific go up and down completely randomly.
Pair Corralation between Capstone Mining and South Pacific
Assuming the 90 days horizon Capstone Mining is expected to generate 3.13 times less return on investment than South Pacific. But when comparing it to its historical volatility, Capstone Mining Corp is 3.25 times less risky than South Pacific. It trades about 0.04 of its potential returns per unit of risk. South Pacific Metals is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 80.00 in South Pacific Metals on October 12, 2024 and sell it today you would lose (30.00) from holding South Pacific Metals or give up 37.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capstone Mining Corp vs. South Pacific Metals
Performance |
| Timeline |
| Capstone Mining Corp |
| South Pacific Metals |
Capstone Mining and South Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capstone Mining and South Pacific
The main advantage of trading using opposite Capstone Mining and South Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capstone Mining position performs unexpectedly, South Pacific 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 South Pacific will offset losses from the drop in South Pacific's long position.| Capstone Mining vs. CNJ Capital Investments | Capstone Mining vs. XXIX Metal Corp | Capstone Mining vs. Sun Peak Metals | Capstone Mining vs. Information Services |
| South Pacific vs. Monument Mining Limited | South Pacific vs. Arizona Gold Silver | South Pacific vs. Capstone Mining Corp | South Pacific vs. Metalero Mining Corp |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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