Correlation Between Gold Road and ZIJIN MINH

Can any of the company-specific risk be diversified away by investing in both Gold Road and ZIJIN MINH 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 Gold Road and ZIJIN MINH into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gold Road Resources and ZIJIN MINH UNSPADR20, you can compare the effects of market volatilities on Gold Road and ZIJIN MINH 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 Gold Road with a short position of ZIJIN MINH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Road and ZIJIN MINH.

Diversification Opportunities for Gold Road and ZIJIN MINH

0.72

Correlation Coefficient

Gold Road  ZIJIN MINH

Poor diversification

The 3 months correlation between Gold and ZIJIN is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Gold Road Resources and ZIJIN MINH UNSPADR20 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZIJIN MINH UNSPADR20 and Gold Road 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 Gold Road Resources are associated (or correlated) with ZIJIN MINH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZIJIN MINH UNSPADR20 has no effect on the direction of Gold Road i.e., Gold Road and ZIJIN MINH go up and down completely randomly.

Pair Corralation between Gold Road and ZIJIN MINH

Assuming the 90 days horizon Gold Road is expected to generate 2.14 times less return on investment than ZIJIN MINH. In addition to that, Gold Road is 1.04 times more volatile than ZIJIN MINH UNSPADR20. It trades about 0.02 of its total potential returns per unit of risk. ZIJIN MINH UNSPADR20 is currently generating about 0.05 per unit of volatility. If you would invest  2,364  in ZIJIN MINH UNSPADR20 on September 4, 2024 and sell it today you would earn a total of  1,596  from holding ZIJIN MINH UNSPADR20 or generate 67.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Gold Road Resources  vs.  ZIJIN MINH UNSPADR20

Gold Road Resources

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Road Resources are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Gold Road reported solid returns over the last few months and may actually be approaching a breakup point.

ZIJIN MINH UNSPADR20

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ZIJIN MINH UNSPADR20 are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ZIJIN MINH reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gold Road and ZIJIN MINH

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

The idea behind Gold Road Resources and ZIJIN MINH UNSPADR20 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.