Correlation Between Zijin Mining and Sinomach Automobile

Can any of the company-specific risk be diversified away by investing in both Zijin Mining and Sinomach Automobile 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 Sinomach Automobile 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 Sinomach Automobile Co, you can compare the effects of market volatilities on Zijin Mining and Sinomach Automobile 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 Sinomach Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zijin Mining and Sinomach Automobile.

Diversification Opportunities for Zijin Mining and Sinomach Automobile

-0.37

Correlation Coefficient

Zijin Mining  Sinomach Automobile

Very good diversification

The 3 months correlation between Zijin and Sinomach is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and Sinomach Automobile Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinomach Automobile 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 Sinomach Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinomach Automobile has no effect on the direction of Zijin Mining i.e., Zijin Mining and Sinomach Automobile go up and down completely randomly.

Pair Corralation between Zijin Mining and Sinomach Automobile

Assuming the 90 days trading horizon Zijin Mining Group is expected to generate 0.66 times more return on investment than Sinomach Automobile. However, Zijin Mining Group is 1.52 times less risky than Sinomach Automobile. It trades about 0.05 of its potential returns per unit of risk. Sinomach Automobile Co is currently generating about -0.03 per unit of risk. If you would invest  1,154  in Zijin Mining Group on September 30, 2024 and sell it today you would earn a total of  376.00  from holding Zijin Mining Group or generate 32.58% return on investment over 90 days.

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

Zijin Mining Group  vs.  Sinomach Automobile Co

Zijin Mining Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zijin Mining Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Sinomach Automobile

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sinomach Automobile Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sinomach Automobile is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Zijin Mining and Sinomach Automobile

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

The idea behind Zijin Mining Group and Sinomach Automobile Co 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.