Correlation Between NeXGold Mining and CGX Energy

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

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

Diversification Opportunities for NeXGold Mining and CGX Energy

0.17

Correlation Coefficient

NeXGold Mining  CGX Energy

Average diversification

The 3 months correlation between NeXGold and CGX is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding NeXGold Mining Corp and CGX Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CGX Energy and NeXGold 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 NeXGold Mining Corp are associated (or correlated) with CGX Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CGX Energy has no effect on the direction of NeXGold Mining i.e., NeXGold Mining and CGX Energy go up and down completely randomly.

Pair Corralation between NeXGold Mining and CGX Energy

Assuming the 90 days trading horizon NeXGold Mining Corp is expected to under-perform the CGX Energy. But the stock apears to be less risky and, when comparing its historical volatility, NeXGold Mining Corp is 2.53 times less risky than CGX Energy. The stock trades about -0.12 of its potential returns per unit of risk. The CGX Energy is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  18.00  in CGX Energy on October 25, 2024 and sell it today you would lose (2.00) from holding CGX Energy or give up 11.11% of portfolio value over 90 days.

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

NeXGold Mining Corp  vs.  CGX Energy

NeXGold Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NeXGold Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

CGX Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CGX Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, CGX Energy is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with NeXGold Mining and CGX Energy

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

The idea behind NeXGold Mining Corp and CGX Energy 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.