Correlation Between Keysight Technologies and Zijin Mining

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

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

Diversification Opportunities for Keysight Technologies and Zijin Mining

-0.08

Correlation Coefficient

Keysight Technologies  Zijin Mining

Good diversification

The 3 months correlation between Keysight and Zijin is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Keysight Technologies 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 Keysight Technologies 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 Keysight Technologies 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 Keysight Technologies i.e., Keysight Technologies and Zijin Mining go up and down completely randomly.

Pair Corralation between Keysight Technologies and Zijin Mining

Assuming the 90 days horizon Keysight Technologies is expected to generate 12.23 times less return on investment than Zijin Mining. But when comparing it to its historical volatility, Keysight Technologies is 1.65 times less risky than Zijin Mining. It trades about 0.01 of its potential returns per unit of risk. Zijin Mining Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  97.00  in Zijin Mining Group on October 25, 2024 and sell it today you would earn a total of  82.00  from holding Zijin Mining Group or generate 84.54% return on investment over 90 days.

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

Keysight Technologies  vs.  Zijin Mining Group

Keysight Technologies

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Keysight Technologies are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Keysight Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Zijin Mining Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zijin Mining Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Keysight Technologies and Zijin Mining

The main advantage of trading using opposite Keysight Technologies and Zijin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Keysight Technologies 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 Keysight Technologies 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.