Correlation Between Zijin Mining and Hainan Shuangcheng

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

Diversification Opportunities for Zijin Mining and Hainan Shuangcheng

0.37

Correlation Coefficient

Zijin Mining  Hainan Shuangcheng

Weak diversification

The 3 months correlation between Zijin and Hainan is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and Hainan Shuangcheng Pharmaceut in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hainan Shuangcheng 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 Hainan Shuangcheng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hainan Shuangcheng has no effect on the direction of Zijin Mining i.e., Zijin Mining and Hainan Shuangcheng go up and down completely randomly.

Pair Corralation between Zijin Mining and Hainan Shuangcheng

Assuming the 90 days trading horizon Zijin Mining Group is expected to under-perform the Hainan Shuangcheng. But the stock apears to be less risky and, when comparing its historical volatility, Zijin Mining Group is 3.84 times less risky than Hainan Shuangcheng. The stock trades about -0.04 of its potential returns per unit of risk. The Hainan Shuangcheng Pharmaceut is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,980  in Hainan Shuangcheng Pharmaceut on October 9, 2024 and sell it today you would lose (347.00) from holding Hainan Shuangcheng Pharmaceut or give up 17.53% of portfolio value over 90 days.

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

Zijin Mining Group  vs.  Hainan Shuangcheng Pharmaceut

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.

Hainan Shuangcheng

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hainan Shuangcheng Pharmaceut has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Hainan Shuangcheng is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Zijin Mining and Hainan Shuangcheng

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

The idea behind Zijin Mining Group and Hainan Shuangcheng Pharmaceut 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.