Correlation Between Information Services and Capstone Mining
Can any of the company-specific risk be diversified away by investing in both Information Services 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 Information Services and Capstone Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Information Services and Capstone Mining Corp, you can compare the effects of market volatilities on Information Services 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 Information Services with a short position of Capstone Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Information Services and Capstone Mining.
Diversification Opportunities for Information Services and Capstone Mining
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Information and Capstone is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Information Services 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 Information Services 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 Information Services 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 Information Services i.e., Information Services and Capstone Mining go up and down completely randomly.
Pair Corralation between Information Services and Capstone Mining
Assuming the 90 days trading horizon Information Services is expected to generate 1.48 times less return on investment than Capstone Mining. But when comparing it to its historical volatility, Information Services is 1.54 times less risky than Capstone Mining. It trades about 0.05 of its potential returns per unit of risk. Capstone Mining Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 603.00 in Capstone Mining Corp on October 12, 2024 and sell it today you would earn a total of 320.00 from holding Capstone Mining Corp or generate 53.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Information Services vs. Capstone Mining Corp
Performance |
| Timeline |
| Information Services |
| Capstone Mining Corp |
Information Services and Capstone Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Information Services and Capstone Mining
The main advantage of trading using opposite Information Services and Capstone Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Information Services 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.| Information Services vs. Medical Facilities | Information Services vs. Guru Organic Energy | Information Services vs. Sun Peak Metals | Information Services vs. Quipt Home Medical |
| Capstone Mining vs. CNJ Capital Investments | Capstone Mining vs. XXIX Metal Corp | Capstone Mining vs. Sun Peak Metals | Capstone Mining vs. Information Services |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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