Correlation Between Ximen Mining and Rainy Mountain
Can any of the company-specific risk be diversified away by investing in both Ximen Mining and Rainy Mountain 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 Rainy Mountain 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 Rainy Mountain Royalty, you can compare the effects of market volatilities on Ximen Mining and Rainy Mountain 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 Rainy Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ximen Mining and Rainy Mountain.
Diversification Opportunities for Ximen Mining and Rainy Mountain
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ximen and Rainy is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Ximen Mining Corp and Rainy Mountain Royalty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rainy Mountain Royalty 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 Rainy Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rainy Mountain Royalty has no effect on the direction of Ximen Mining i.e., Ximen Mining and Rainy Mountain go up and down completely randomly.
Pair Corralation between Ximen Mining and Rainy Mountain
Assuming the 90 days horizon Ximen Mining Corp is expected to generate 7.34 times more return on investment than Rainy Mountain. However, Ximen Mining is 7.34 times more volatile than Rainy Mountain Royalty. It trades about 0.06 of its potential returns per unit of risk. Rainy Mountain Royalty is currently generating about -0.03 per unit of risk. If you would invest 38.00 in Ximen Mining Corp on August 28, 2024 and sell it today you would lose (28.50) from holding Ximen Mining Corp or give up 75.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 92.05% |
| Values | Daily Returns |
Ximen Mining Corp vs. Rainy Mountain Royalty
Performance |
| Timeline |
| Ximen Mining Corp |
| Rainy Mountain Royalty |
Ximen Mining and Rainy Mountain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ximen Mining and Rainy Mountain
The main advantage of trading using opposite Ximen Mining and Rainy Mountain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ximen Mining position performs unexpectedly, Rainy Mountain 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 Rainy Mountain will offset losses from the drop in Rainy Mountain's long position.The idea behind Ximen Mining Corp and Rainy Mountain Royalty 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.| Rainy Mountain vs. Doman Building Materials | Rainy Mountain vs. Queens Road Capital | Rainy Mountain vs. Enerev5 Metals | Rainy Mountain vs. Slate Grocery REIT |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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