Correlation Between Dundee Precious and Zijin Mining

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

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

Diversification Opportunities for Dundee Precious and Zijin Mining

0.61

Correlation Coefficient

Dundee Precious  Zijin Mining

Poor diversification

The 3 months correlation between Dundee and Zijin is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Dundee Precious Metals 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 Dundee Precious 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 Dundee Precious Metals 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 Dundee Precious i.e., Dundee Precious and Zijin Mining go up and down completely randomly.

Pair Corralation between Dundee Precious and Zijin Mining

Assuming the 90 days horizon Dundee Precious Metals is expected to generate 0.41 times more return on investment than Zijin Mining. However, Dundee Precious Metals is 2.46 times less risky than Zijin Mining. It trades about 0.16 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  901.00  in Dundee Precious Metals on September 13, 2024 and sell it today you would earn a total of  50.00  from holding Dundee Precious Metals or generate 5.55% return on investment over 90 days.

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

Dundee Precious Metals  vs.  Zijin Mining Group

Dundee Precious Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dundee Precious Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Dundee Precious is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Zijin Mining Group

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Zijin Mining Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Zijin Mining may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Dundee Precious and Zijin Mining

The main advantage of trading using opposite Dundee Precious and Zijin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dundee Precious 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 Dundee Precious Metals 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.