Correlation Between Zijin Mining and Equity Residential
Can any of the company-specific risk be diversified away by investing in both Zijin Mining and Equity Residential 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 Equity Residential 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 Equity Residential, you can compare the effects of market volatilities on Zijin Mining and Equity Residential 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 Equity Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zijin Mining and Equity Residential.
Diversification Opportunities for Zijin Mining and Equity Residential
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Zijin and Equity is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and Equity Residential in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Residential 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 Equity Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Residential has no effect on the direction of Zijin Mining i.e., Zijin Mining and Equity Residential go up and down completely randomly.
Pair Corralation between Zijin Mining and Equity Residential
Assuming the 90 days horizon Zijin Mining Group is expected to generate 2.5 times more return on investment than Equity Residential. However, Zijin Mining is 2.5 times more volatile than Equity Residential. It trades about -0.06 of its potential returns per unit of risk. Equity Residential is currently generating about -0.22 per unit of risk. If you would invest 179.00 in Zijin Mining Group on September 24, 2024 and sell it today you would lose (8.00) from holding Zijin Mining Group or give up 4.47% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Zijin Mining Group vs. Equity Residential
Performance |
Timeline |
Zijin Mining Group |
Equity Residential |
Zijin Mining and Equity Residential Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Zijin Mining and Equity Residential
The main advantage of trading using opposite Zijin Mining and Equity Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zijin Mining position performs unexpectedly, Equity Residential 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 Equity Residential will offset losses from the drop in Equity Residential's long position.Zijin Mining vs. BHP Group Limited | Zijin Mining vs. BHP Group Limited | Zijin Mining vs. Rio Tinto Group | Zijin Mining vs. Rio Tinto Group |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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