Correlation Between Capstone Copper and Rave Restaurant

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

Diversification Opportunities for Capstone Copper and Rave Restaurant

-0.31
  Correlation Coefficient

Very good diversification

The 3 months correlation between Capstone and Rave is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Capstone Copper Corp and Rave Restaurant Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rave Restaurant Group and Capstone Copper 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 Copper Corp are associated (or correlated) with Rave Restaurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rave Restaurant Group has no effect on the direction of Capstone Copper i.e., Capstone Copper and Rave Restaurant go up and down completely randomly.

Pair Corralation between Capstone Copper and Rave Restaurant

Assuming the 90 days horizon Capstone Copper Corp is expected to generate 1.07 times more return on investment than Rave Restaurant. However, Capstone Copper is 1.07 times more volatile than Rave Restaurant Group. It trades about 0.24 of its potential returns per unit of risk. Rave Restaurant Group is currently generating about 0.25 per unit of risk. If you would invest  529.00  in Capstone Copper Corp on December 29, 2023 and sell it today you would earn a total of  89.00  from holding Capstone Copper Corp or generate 16.82% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Capstone Copper Corp  vs.  Rave Restaurant Group

 Performance 
       Timeline  
Capstone Copper Corp 

Risk-Adjusted Performance

11 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Capstone Copper Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Capstone Copper reported solid returns over the last few months and may actually be approaching a breakup point.
Rave Restaurant Group 

Risk-Adjusted Performance

1 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Rave Restaurant Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Rave Restaurant is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Capstone Copper and Rave Restaurant Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Capstone Copper and Rave Restaurant

The main advantage of trading using opposite Capstone Copper and Rave Restaurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capstone Copper position performs unexpectedly, Rave Restaurant 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 Rave Restaurant will offset losses from the drop in Rave Restaurant's long position.
The idea behind Capstone Copper Corp and Rave Restaurant Group 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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