Correlation Between Ximen Mining and Valeura Energy

Can any of the company-specific risk be diversified away by investing in both Ximen Mining and Valeura 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 Ximen Mining and Valeura Energy 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 Valeura Energy, you can compare the effects of market volatilities on Ximen Mining and Valeura 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 Ximen Mining with a short position of Valeura Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ximen Mining and Valeura Energy.

Diversification Opportunities for Ximen Mining and Valeura Energy

-0.78

Correlation Coefficient

Ximen Mining  Valeura Energy

Pay attention - limited upside

The 3 months correlation between Ximen and Valeura is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Ximen Mining Corp and Valeura Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valeura Energy 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 Valeura Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valeura Energy has no effect on the direction of Ximen Mining i.e., Ximen Mining and Valeura Energy go up and down completely randomly.

Pair Corralation between Ximen Mining and Valeura Energy

Assuming the 90 days horizon Ximen Mining Corp is expected to generate 16.98 times more return on investment than Valeura Energy. However, Ximen Mining is 16.98 times more volatile than Valeura Energy. It trades about 0.13 of its potential returns per unit of risk. Valeura Energy is currently generating about 0.07 per unit of risk. If you would invest  68.00  in Ximen Mining Corp on October 4, 2024 and sell it today you would lose (60.50) from holding Ximen Mining Corp or give up 88.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	94.55%
Values	Daily Returns

Ximen Mining Corp  vs.  Valeura Energy

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 latest unfluctuating performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Valeura Energy

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Valeura Energy are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Valeura Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ximen Mining and Valeura Energy

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

The idea behind Ximen Mining Corp and Valeura 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.

Check out your portfolio center.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.