Correlation Between Century Global and Xtra Gold

Can any of the company-specific risk be diversified away by investing in both Century Global and Xtra Gold 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 Century Global and Xtra Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Century Global Commodities and Xtra Gold Resources Corp, you can compare the effects of market volatilities on Century Global and Xtra Gold 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 Century Global with a short position of Xtra Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Global and Xtra Gold.

Diversification Opportunities for Century Global and Xtra Gold

-0.13

Correlation Coefficient

Century Global  Xtra Gold

Good diversification

The 3 months correlation between Century and Xtra is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Century Global Commodities and Xtra Gold Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtra Gold Resources and Century Global 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 Century Global Commodities are associated (or correlated) with Xtra Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtra Gold Resources has no effect on the direction of Century Global i.e., Century Global and Xtra Gold go up and down completely randomly.

Pair Corralation between Century Global and Xtra Gold

Assuming the 90 days trading horizon Century Global is expected to generate 1.97 times less return on investment than Xtra Gold. In addition to that, Century Global is 3.13 times more volatile than Xtra Gold Resources Corp. It trades about 0.01 of its total potential returns per unit of risk. Xtra Gold Resources Corp is currently generating about 0.06 per unit of volatility. If you would invest  95.00  in Xtra Gold Resources Corp on October 21, 2024 and sell it today you would earn a total of  89.00  from holding Xtra Gold Resources Corp or generate 93.68% return on investment over 90 days.

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

Century Global Commodities  vs.  Xtra Gold Resources Corp

Century Global Commo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Century Global Commodities has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Xtra Gold Resources

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xtra Gold Resources Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Xtra Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Century Global and Xtra Gold

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

The idea behind Century Global Commodities and Xtra Gold Resources 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.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.