Correlation Between National Bank and Zijin Mining

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

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

Diversification Opportunities for National Bank and Zijin Mining

-0.5

Correlation Coefficient

National Bank  Zijin Mining

Very good diversification

The 3 months correlation between National and Zijin is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding National Bank Holdings 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 National Bank 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 National Bank Holdings 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 National Bank i.e., National Bank and Zijin Mining go up and down completely randomly.

Pair Corralation between National Bank and Zijin Mining

Assuming the 90 days horizon National Bank Holdings is expected to generate 0.71 times more return on investment than Zijin Mining. However, National Bank Holdings is 1.41 times less risky than Zijin Mining. It trades about 0.11 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  3,696  in National Bank Holdings on September 19, 2024 and sell it today you would earn a total of  624.00  from holding National Bank Holdings or generate 16.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

National Bank Holdings  vs.  Zijin Mining Group

National Bank Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in National Bank Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, National Bank reported solid returns over the last few months and may actually be approaching a breakup point.

Zijin Mining Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Zijin Mining Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic 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 National Bank and Zijin Mining

The main advantage of trading using opposite National Bank and Zijin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank 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 National Bank Holdings 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.