Correlation Between Precision Drilling and NeXGold Mining

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

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

Diversification Opportunities for Precision Drilling and NeXGold Mining

-0.07

Correlation Coefficient

Precision Drilling  NeXGold Mining

Good diversification

The 3 months correlation between Precision and NeXGold is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Precision Drilling and NeXGold Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NeXGold Mining Corp and Precision Drilling 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 Precision Drilling are associated (or correlated) with NeXGold Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NeXGold Mining Corp has no effect on the direction of Precision Drilling i.e., Precision Drilling and NeXGold Mining go up and down completely randomly.

Pair Corralation between Precision Drilling and NeXGold Mining

Assuming the 90 days horizon Precision Drilling is expected to under-perform the NeXGold Mining. But the stock apears to be less risky and, when comparing its historical volatility, Precision Drilling is 1.67 times less risky than NeXGold Mining. The stock trades about -0.22 of its potential returns per unit of risk. The NeXGold Mining Corp is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  69.00  in NeXGold Mining Corp on December 31, 2024 and sell it today you would lose (3.00) from holding NeXGold Mining Corp or give up 4.35% of portfolio value over 90 days.

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

Precision Drilling  vs.  NeXGold Mining Corp

Precision Drilling

Risk-Adjusted Performance

Very Weak

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

NeXGold Mining Corp

Risk-Adjusted Performance

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 fairly stable basic indicators, NeXGold Mining is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Precision Drilling and NeXGold Mining

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

The idea behind Precision Drilling and NeXGold Mining 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.

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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.