Correlation Between Zijin Mining and Anhui Huilong

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

Diversification Opportunities for Zijin Mining and Anhui Huilong

0.09

Correlation Coefficient

Zijin Mining  Anhui Huilong

Significant diversification

The 3 months correlation between Zijin and Anhui is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and Anhui Huilong Agricultural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anhui Huilong Agricu 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 Anhui Huilong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anhui Huilong Agricu has no effect on the direction of Zijin Mining i.e., Zijin Mining and Anhui Huilong go up and down completely randomly.

Pair Corralation between Zijin Mining and Anhui Huilong

Assuming the 90 days trading horizon Zijin Mining is expected to generate 8.26 times less return on investment than Anhui Huilong. But when comparing it to its historical volatility, Zijin Mining Group is 3.22 times less risky than Anhui Huilong. It trades about 0.04 of its potential returns per unit of risk. Anhui Huilong Agricultural is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  600.00  in Anhui Huilong Agricultural on September 13, 2024 and sell it today you would earn a total of  44.00  from holding Anhui Huilong Agricultural or generate 7.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Zijin Mining Group  vs.  Anhui Huilong Agricultural

Zijin Mining Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zijin Mining Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zijin Mining may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Anhui Huilong Agricu

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Anhui Huilong Agricultural are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Anhui Huilong sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zijin Mining and Anhui Huilong

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

The idea behind Zijin Mining Group and Anhui Huilong Agricultural 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.