Correlation Between Zijin Mining and Wankai New

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

Diversification Opportunities for Zijin Mining and Wankai New

0.21

Correlation Coefficient

Zijin Mining  Wankai New

Modest diversification

The 3 months correlation between Zijin and Wankai is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and Wankai New Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wankai New Materials 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 Wankai New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wankai New Materials has no effect on the direction of Zijin Mining i.e., Zijin Mining and Wankai New go up and down completely randomly.

Pair Corralation between Zijin Mining and Wankai New

Assuming the 90 days trading horizon Zijin Mining Group is expected to generate 0.84 times more return on investment than Wankai New. However, Zijin Mining Group is 1.19 times less risky than Wankai New. It trades about -0.12 of its potential returns per unit of risk. Wankai New Materials is currently generating about -0.13 per unit of risk. If you would invest  1,796  in Zijin Mining Group on October 2, 2024 and sell it today you would lose (242.00) from holding Zijin Mining Group or give up 13.47% 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.  Wankai New Materials

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 weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Wankai New Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wankai New Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Zijin Mining and Wankai New

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

The idea behind Zijin Mining Group and Wankai New Materials 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.