Correlation Between Chakana Copper and Ximen Mining

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

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

Diversification Opportunities for Chakana Copper and Ximen Mining

0.21

Correlation Coefficient

Chakana Copper  Ximen Mining

Modest diversification

The 3 months correlation between Chakana and Ximen is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Chakana Copper Corp and Ximen Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ximen Mining Corp and Chakana Copper 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 Chakana Copper Corp are associated (or correlated) with Ximen Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ximen Mining Corp has no effect on the direction of Chakana Copper i.e., Chakana Copper and Ximen Mining go up and down completely randomly.

Pair Corralation between Chakana Copper and Ximen Mining

Assuming the 90 days trading horizon Chakana Copper Corp is expected to generate 2.33 times more return on investment than Ximen Mining. However, Chakana Copper is 2.33 times more volatile than Ximen Mining Corp. It trades about 0.04 of its potential returns per unit of risk. Ximen Mining Corp is currently generating about -0.09 per unit of risk. If you would invest  2.50  in Chakana Copper Corp on October 11, 2024 and sell it today you would lose (0.25) from holding Chakana Copper Corp or give up 10.0% of portfolio value over 90 days.

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

Chakana Copper Corp  vs.  Ximen Mining Corp

Chakana Copper Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Chakana Copper Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Chakana Copper showed solid returns over the last few months and may actually be approaching a breakup point.

Ximen Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ximen Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Ximen Mining 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 Chakana Copper and Ximen Mining

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

The idea behind Chakana Copper Corp and Ximen 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.