Correlation Between Zijin Mining and PT Barito

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

Diversification Opportunities for Zijin Mining and PT Barito

-0.11

Correlation Coefficient

Zijin Mining  PT Barito

Good diversification

The 3 months correlation between Zijin and OB8 is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and PT Barito Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Barito Pacific 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 PT Barito. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Barito Pacific has no effect on the direction of Zijin Mining i.e., Zijin Mining and PT Barito go up and down completely randomly.

Pair Corralation between Zijin Mining and PT Barito

Assuming the 90 days horizon Zijin Mining Group is expected to generate 0.55 times more return on investment than PT Barito. However, Zijin Mining Group is 1.82 times less risky than PT Barito. It trades about 0.04 of its potential returns per unit of risk. PT Barito Pacific is currently generating about -0.03 per unit of risk. If you would invest  169.00  in Zijin Mining Group on September 3, 2024 and sell it today you would earn a total of  8.00  from holding Zijin Mining Group or generate 4.73% 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.  PT Barito Pacific

Zijin Mining Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Zijin Mining Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Zijin Mining may actually be approaching a critical reversion point that can send shares even higher in January 2025.

PT Barito Pacific

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Barito Pacific has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Zijin Mining and PT Barito

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

The idea behind Zijin Mining Group and PT Barito Pacific 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.