Correlation Between Zijin Mining and China Nonferrous

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

By analyzing existing cross correlation between Zijin Mining Group and China Nonferrous Metal, you can compare the effects of market volatilities on Zijin Mining and China Nonferrous 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 Zijin Mining with a short position of China Nonferrous. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zijin Mining and China Nonferrous.

Diversification Opportunities for Zijin Mining and China Nonferrous

0.51

Correlation Coefficient

Zijin Mining  China Nonferrous

Very weak diversification

The 3 months correlation between Zijin and China is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and China Nonferrous Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Nonferrous Metal and Zijin 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 Zijin Mining Group are associated (or correlated) with China Nonferrous. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Nonferrous Metal has no effect on the direction of Zijin Mining i.e., Zijin Mining and China Nonferrous go up and down completely randomly.

Pair Corralation between Zijin Mining and China Nonferrous

Assuming the 90 days trading horizon Zijin Mining is expected to generate 2.29 times less return on investment than China Nonferrous. But when comparing it to its historical volatility, Zijin Mining Group is 1.38 times less risky than China Nonferrous. It trades about 0.11 of its potential returns per unit of risk. China Nonferrous Metal is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  396.00  in China Nonferrous Metal on September 12, 2024 and sell it today you would earn a total of  131.00  from holding China Nonferrous Metal or generate 33.08% return on investment over 90 days.

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

Zijin Mining Group  vs.  China Nonferrous Metal

Zijin Mining Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zijin Mining Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zijin Mining sustained solid returns over the last few months and may actually be approaching a breakup point.

China Nonferrous Metal

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in China Nonferrous Metal are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, China Nonferrous sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zijin Mining and China Nonferrous

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

The idea behind Zijin Mining Group and China Nonferrous Metal 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.