Correlation Between Zijin Mining and SuZhou ChunXing

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

Diversification Opportunities for Zijin Mining and SuZhou ChunXing

-0.67

Correlation Coefficient

Zijin Mining  SuZhou ChunXing

Excellent diversification

The 3 months correlation between Zijin and SuZhou is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and SuZhou ChunXing Precision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SuZhou ChunXing Precision 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 SuZhou ChunXing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SuZhou ChunXing Precision has no effect on the direction of Zijin Mining i.e., Zijin Mining and SuZhou ChunXing go up and down completely randomly.

Pair Corralation between Zijin Mining and SuZhou ChunXing

Assuming the 90 days trading horizon Zijin Mining Group is expected to generate 0.56 times more return on investment than SuZhou ChunXing. However, Zijin Mining Group is 1.79 times less risky than SuZhou ChunXing. It trades about 0.05 of its potential returns per unit of risk. SuZhou ChunXing Precision is currently generating about 0.01 per unit of risk. If you would invest  1,134  in Zijin Mining Group on October 15, 2024 and sell it today you would earn a total of  506.00  from holding Zijin Mining Group or generate 44.62% return on investment over 90 days.

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

Zijin Mining Group  vs.  SuZhou ChunXing Precision

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 somewhat strong basic indicators, Zijin Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

SuZhou ChunXing Precision

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SuZhou ChunXing Precision are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SuZhou ChunXing sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zijin Mining and SuZhou ChunXing

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

The idea behind Zijin Mining Group and SuZhou ChunXing Precision 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.