Correlation Between Zijin Mining and STMicroelectronics

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

Diversification Opportunities for Zijin Mining and STMicroelectronics

0.57

Correlation Coefficient

Zijin Mining  STMicroelectronics

Very weak diversification

The 3 months correlation between Zijin and STMicroelectronics is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and STMicroelectronics NV ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics NV ADR 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 STMicroelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STMicroelectronics NV ADR has no effect on the direction of Zijin Mining i.e., Zijin Mining and STMicroelectronics go up and down completely randomly.

Pair Corralation between Zijin Mining and STMicroelectronics

Assuming the 90 days horizon Zijin Mining Group is expected to generate 1.82 times more return on investment than STMicroelectronics. However, Zijin Mining is 1.82 times more volatile than STMicroelectronics NV ADR. It trades about 0.02 of its potential returns per unit of risk. STMicroelectronics NV ADR is currently generating about -0.06 per unit of risk. If you would invest  186.00  in Zijin Mining Group on September 17, 2024 and sell it today you would earn a total of  3.00  from holding Zijin Mining Group or generate 1.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Zijin Mining Group  vs.  STMicroelectronics NV ADR

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 primary indicators, Zijin Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

STMicroelectronics NV ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days STMicroelectronics NV ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Zijin Mining and STMicroelectronics

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

The idea behind Zijin Mining Group and STMicroelectronics NV ADR 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.