Correlation Between Clean Air and Capitan Mining

Can any of the company-specific risk be diversified away by investing in both Clean Air and Capitan 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 Clean Air and Capitan Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Clean Air Metals and Capitan Mining, you can compare the effects of market volatilities on Clean Air and Capitan 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 Clean Air with a short position of Capitan Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Air and Capitan Mining.

Diversification Opportunities for Clean Air and Capitan Mining

0.6

Correlation Coefficient

Clean Air  Capitan Mining

Poor diversification

The 3 months correlation between Clean and Capitan is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Clean Air Metals and Capitan Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitan Mining and Clean Air 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 Clean Air Metals are associated (or correlated) with Capitan Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitan Mining has no effect on the direction of Clean Air i.e., Clean Air and Capitan Mining go up and down completely randomly.

Pair Corralation between Clean Air and Capitan Mining

Assuming the 90 days horizon Clean Air is expected to generate 2.2 times less return on investment than Capitan Mining. In addition to that, Clean Air is 1.02 times more volatile than Capitan Mining. It trades about 0.09 of its total potential returns per unit of risk. Capitan Mining is currently generating about 0.2 per unit of volatility. If you would invest  28.00  in Capitan Mining on May 18, 2025 and sell it today you would earn a total of  37.00  from holding Capitan Mining or generate 132.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Clean Air Metals  vs.  Capitan Mining

Clean Air Metals

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Clean Air Metals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Clean Air reported solid returns over the last few months and may actually be approaching a breakup point.

Capitan Mining

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Capitan Mining are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Capitan Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Clean Air and Capitan Mining

The main advantage of trading using opposite Clean Air and Capitan Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clean Air position performs unexpectedly, Capitan 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 Capitan Mining will offset losses from the drop in Capitan Mining's long position.

The idea behind Clean Air Metals and Capitan Mining 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.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.