Correlation Between Leons Furniture and Capstone Mining
Can any of the company-specific risk be diversified away by investing in both Leons Furniture 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 Leons Furniture and Capstone Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leons Furniture Limited and Capstone Mining Corp, you can compare the effects of market volatilities on Leons Furniture 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 Leons Furniture with a short position of Capstone Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leons Furniture and Capstone Mining.
Diversification Opportunities for Leons Furniture and Capstone Mining
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Leons and Capstone is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Leons Furniture Limited 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 Leons Furniture 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 Leons Furniture Limited 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 Leons Furniture i.e., Leons Furniture and Capstone Mining go up and down completely randomly.
Pair Corralation between Leons Furniture and Capstone Mining
Assuming the 90 days trading horizon Leons Furniture is expected to generate 1.6 times less return on investment than Capstone Mining. But when comparing it to its historical volatility, Leons Furniture Limited is 1.49 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 638.00 in Capstone Mining Corp on September 12, 2024 and sell it today you would earn a total of 305.00 from holding Capstone Mining Corp or generate 47.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leons Furniture Limited vs. Capstone Mining Corp
Performance |
| Timeline |
| Leons Furniture |
| Capstone Mining Corp |
Leons Furniture and Capstone Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leons Furniture and Capstone Mining
The main advantage of trading using opposite Leons Furniture and Capstone Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leons Furniture 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.| Leons Furniture vs. Apple Inc CDR | Leons Furniture vs. NVIDIA CDR | Leons Furniture vs. Microsoft Corp CDR | Leons Furniture vs. Amazon CDR |
| Capstone Mining vs. Gfl Environmental Holdings | Capstone Mining vs. Metalero Mining Corp | Capstone Mining vs. NorthWest Healthcare Properties | Capstone Mining vs. Ramp 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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