Correlation Between US Gold and Ximen Mining

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

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

Diversification Opportunities for US Gold and Ximen Mining

-0.48

Correlation Coefficient

US Gold  Ximen Mining

Very good diversification

The 3 months correlation between USAU and Ximen is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding US Gold 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 US Gold 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 US Gold 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 US Gold i.e., US Gold and Ximen Mining go up and down completely randomly.

Pair Corralation between US Gold and Ximen Mining

Given the investment horizon of 90 days US Gold is expected to generate 1.13 times less return on investment than Ximen Mining. But when comparing it to its historical volatility, US Gold Corp is 3.72 times less risky than Ximen Mining. It trades about 0.11 of its potential returns per unit of risk. Ximen Mining Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  12.00  in Ximen Mining Corp on December 2, 2024 and sell it today you would lose (7.50) from holding Ximen Mining Corp or give up 62.5% of portfolio value over 90 days.

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

US Gold Corp  vs.  Ximen Mining Corp

US Gold Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in US Gold Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, US Gold may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Ximen Mining Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ximen Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with US Gold and Ximen Mining

The main advantage of trading using opposite US Gold and Ximen Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Gold 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 US Gold 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.