Correlation Between Zijin Mining and Newcrest Mining

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

Diversification Opportunities for Zijin Mining and Newcrest Mining

-0.61

Correlation Coefficient

Zijin Mining  Newcrest Mining

Excellent diversification

The 3 months correlation between Zijin and Newcrest is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and Newcrest Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newcrest Mining 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 Newcrest Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newcrest Mining has no effect on the direction of Zijin Mining i.e., Zijin Mining and Newcrest Mining go up and down completely randomly.

Pair Corralation between Zijin Mining and Newcrest Mining

If you would invest  3,938  in Zijin Mining Group on September 4, 2024 and sell it today you would lose (30.00) from holding Zijin Mining Group or give up 0.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.59%
Values	Daily Returns

Zijin Mining Group  vs.  Newcrest Mining

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. In spite of fairly strong primary indicators, Zijin Mining is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Newcrest Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Newcrest Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Newcrest 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 Zijin Mining and Newcrest Mining

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

The idea behind Zijin Mining Group and Newcrest Mining 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.