Correlation Between Zijin Mining and Guangzhou Haige

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

Diversification Opportunities for Zijin Mining and Guangzhou Haige

-0.08

Correlation Coefficient

Zijin Mining  Guangzhou Haige

Good diversification

The 3 months correlation between Zijin and Guangzhou is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and Guangzhou Haige Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Haige Comm 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 Guangzhou Haige. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Haige Comm has no effect on the direction of Zijin Mining i.e., Zijin Mining and Guangzhou Haige go up and down completely randomly.

Pair Corralation between Zijin Mining and Guangzhou Haige

Assuming the 90 days trading horizon Zijin Mining Group is expected to under-perform the Guangzhou Haige. But the stock apears to be less risky and, when comparing its historical volatility, Zijin Mining Group is 1.33 times less risky than Guangzhou Haige. The stock trades about -0.02 of its potential returns per unit of risk. The Guangzhou Haige Communications is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,030  in Guangzhou Haige Communications on September 25, 2024 and sell it today you would earn a total of  119.00  from holding Guangzhou Haige Communications or generate 11.55% return on investment over 90 days.

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

Zijin Mining Group  vs.  Guangzhou Haige Communications

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 weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Guangzhou Haige Comm

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guangzhou Haige Communications are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangzhou Haige sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zijin Mining and Guangzhou Haige

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

The idea behind Zijin Mining Group and Guangzhou Haige Communications 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.