Correlation Between Bank of New York and Zijin Mining

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

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

Diversification Opportunities for Bank of New York and Zijin Mining

0.09

Correlation Coefficient

Bank of New York  Zijin Mining

Significant diversification

The 3 months correlation between Bank and Zijin is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Bank of New and Zijin Mining Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zijin Mining Group and Bank of New York 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 Bank of New are associated (or correlated) with Zijin Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zijin Mining Group has no effect on the direction of Bank of New York i.e., Bank of New York and Zijin Mining go up and down completely randomly.

Pair Corralation between Bank of New York and Zijin Mining

Allowing for the 90-day total investment horizon Bank of New is expected to generate 0.3 times more return on investment than Zijin Mining. However, Bank of New is 3.3 times less risky than Zijin Mining. It trades about 0.29 of its potential returns per unit of risk. Zijin Mining Group is currently generating about -0.02 per unit of risk. If you would invest  6,747  in Bank of New on August 31, 2024 and sell it today you would earn a total of  1,427  from holding Bank of New or generate 21.15% return on investment over 90 days.

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

Bank of New  vs.  Zijin Mining Group

Bank of New York

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of New are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain forward-looking signals, Bank of New York disclosed solid returns over the last few months and may actually be approaching a breakup point.

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 nearly stable primary indicators, Zijin Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Bank of New York and Zijin Mining

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

The idea behind Bank of New and Zijin Mining Group 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.