Correlation Between HudBay Minerals and Capstone Mining

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

Diversification Opportunities for HudBay Minerals and Capstone Mining

0.42
  Correlation Coefficient

Very weak diversification

The 3 months correlation between HudBay and Capstone is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding HudBay Minerals 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 HudBay Minerals 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 HudBay Minerals 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 HudBay Minerals i.e., HudBay Minerals and Capstone Mining go up and down completely randomly.

Pair Corralation between HudBay Minerals and Capstone Mining

Assuming the 90 days trading horizon HudBay Minerals is expected to under-perform the Capstone Mining. In addition to that, HudBay Minerals is 1.35 times more volatile than Capstone Mining Corp. It trades about -0.07 of its total potential returns per unit of risk. Capstone Mining Corp is currently generating about 0.11 per unit of volatility. If you would invest  798.00  in Capstone Mining Corp on November 29, 2024 and sell it today you would earn a total of  53.00  from holding Capstone Mining Corp or generate 6.64% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

HudBay Minerals  vs.  Capstone Mining Corp

 Performance 
       Timeline  
HudBay Minerals 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days HudBay Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.
Capstone Mining Corp 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Capstone Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

HudBay Minerals and Capstone Mining Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with HudBay Minerals and Capstone Mining

The main advantage of trading using opposite HudBay Minerals and Capstone Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HudBay Minerals 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 HudBay Minerals 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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