Correlation Between Ximen Mining and Fairfax Fin

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

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

Diversification Opportunities for Ximen Mining and Fairfax Fin

0.47

Correlation Coefficient

Ximen Mining  Fairfax Fin

Very weak diversification

The 3 months correlation between Ximen and Fairfax is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Ximen Mining Corp and Fairfax Fin Hld in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fairfax Fin Hld and Ximen 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 Ximen Mining Corp are associated (or correlated) with Fairfax Fin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fairfax Fin Hld has no effect on the direction of Ximen Mining i.e., Ximen Mining and Fairfax Fin go up and down completely randomly.

Pair Corralation between Ximen Mining and Fairfax Fin

Assuming the 90 days horizon Ximen Mining Corp is expected to generate 6.6 times more return on investment than Fairfax Fin. However, Ximen Mining is 6.6 times more volatile than Fairfax Fin Hld. It trades about 0.18 of its potential returns per unit of risk. Fairfax Fin Hld is currently generating about 0.11 per unit of risk. If you would invest  7.50  in Ximen Mining Corp on December 21, 2024 and sell it today you would earn a total of  8.50  from holding Ximen Mining Corp or generate 113.33% return on investment over 90 days.

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

Ximen Mining Corp  vs.  Fairfax Fin Hld

Ximen Mining Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ximen Mining Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Ximen Mining showed solid returns over the last few months and may actually be approaching a breakup point.

Fairfax Fin Hld

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fairfax Fin Hld are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical indicators, Fairfax Fin may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Ximen Mining and Fairfax Fin

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

The idea behind Ximen Mining Corp and Fairfax Fin Hld 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.