Correlation Between CSSC Offshore and Zijin Mining

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

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

Diversification Opportunities for CSSC Offshore and Zijin Mining

0.15

Correlation Coefficient

CSSC Offshore  Zijin Mining

Average diversification

The 3 months correlation between CSSC and Zijin is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding CSSC Offshore Marine 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 CSSC Offshore 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 CSSC Offshore Marine 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 CSSC Offshore i.e., CSSC Offshore and Zijin Mining go up and down completely randomly.

Pair Corralation between CSSC Offshore and Zijin Mining

Assuming the 90 days trading horizon CSSC Offshore is expected to generate 7.01 times less return on investment than Zijin Mining. But when comparing it to its historical volatility, CSSC Offshore Marine is 1.4 times less risky than Zijin Mining. It trades about 0.03 of its potential returns per unit of risk. Zijin Mining Group is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,552  in Zijin Mining Group on December 25, 2024 and sell it today you would earn a total of  253.00  from holding Zijin Mining Group or generate 16.3% return on investment over 90 days.

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

CSSC Offshore Marine  vs.  Zijin Mining Group

CSSC Offshore Marine

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CSSC Offshore Marine are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, CSSC Offshore is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Zijin Mining Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zijin Mining Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zijin Mining sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CSSC Offshore and Zijin Mining

The main advantage of trading using opposite CSSC Offshore and Zijin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSSC Offshore 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 CSSC Offshore Marine 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.