Correlation Between Capstone Mining and Precision Drilling

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

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

Diversification Opportunities for Capstone Mining and Precision Drilling

0.71

Correlation Coefficient

Capstone Mining  Precision Drilling

Poor diversification

The 3 months correlation between Capstone and Precision is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Capstone Mining Corp and Precision Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precision Drilling and Capstone 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 Capstone Mining Corp are associated (or correlated) with Precision Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precision Drilling has no effect on the direction of Capstone Mining i.e., Capstone Mining and Precision Drilling go up and down completely randomly.

Pair Corralation between Capstone Mining and Precision Drilling

Assuming the 90 days horizon Capstone Mining Corp is expected to generate 1.07 times more return on investment than Precision Drilling. However, Capstone Mining is 1.07 times more volatile than Precision Drilling. It trades about 0.17 of its potential returns per unit of risk. Precision Drilling is currently generating about 0.14 per unit of risk. If you would invest  715.00  in Capstone Mining Corp on May 12, 2025 and sell it today you would earn a total of  201.00  from holding Capstone Mining Corp or generate 28.11% return on investment over 90 days.

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

Capstone Mining Corp  vs.  Precision Drilling

Capstone Mining Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Capstone Mining Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Capstone Mining displayed solid returns over the last few months and may actually be approaching a breakup point.

Precision Drilling

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Precision Drilling are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Precision Drilling displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capstone Mining and Precision Drilling

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

The idea behind Capstone Mining Corp and Precision Drilling 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.