Correlation Between Lundin Mining and Capstone Mining
Can any of the company-specific risk be diversified away by investing in both Lundin Mining 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 Lundin Mining and Capstone Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lundin Mining and Capstone Mining Corp, you can compare the effects of market volatilities on Lundin Mining 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 Lundin Mining with a short position of Capstone Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lundin Mining and Capstone Mining.
Diversification Opportunities for Lundin Mining and Capstone Mining
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lundin and Capstone is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Mining 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 Lundin 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 Lundin Mining 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 Lundin Mining i.e., Lundin Mining and Capstone Mining go up and down completely randomly.
Pair Corralation between Lundin Mining and Capstone Mining
Assuming the 90 days trading horizon Lundin Mining is expected to generate 1.32 times less return on investment than Capstone Mining. But when comparing it to its historical volatility, Lundin Mining is 1.17 times less risky than Capstone Mining. It trades about 0.06 of its potential returns per unit of risk. Capstone Mining Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 470.00 in Capstone Mining Corp on August 29, 2024 and sell it today you would earn a total of 492.00 from holding Capstone Mining Corp or generate 104.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lundin Mining vs. Capstone Mining Corp
Performance |
| Timeline |
| Lundin Mining |
| Capstone Mining Corp |
Lundin Mining and Capstone Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lundin Mining and Capstone Mining
The main advantage of trading using opposite Lundin Mining and Capstone Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lundin Mining 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 Lundin Mining 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.| Capstone Mining vs. AKITA Drilling | Capstone Mining vs. Maple Peak Investments | Capstone Mining vs. Plaza Retail REIT | Capstone Mining vs. Constellation Software |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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