Correlation Between Zijin Mining and Hubei Xingfa

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

Diversification Opportunities for Zijin Mining and Hubei Xingfa

ZijinHubeiDiversified AwayZijinHubeiDiversified Away100%
0.47
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Zijin and Hubei is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and Hubei Xingfa Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hubei Xingfa Chemicals 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 Hubei Xingfa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hubei Xingfa Chemicals has no effect on the direction of Zijin Mining i.e., Zijin Mining and Hubei Xingfa go up and down completely randomly.

Pair Corralation between Zijin Mining and Hubei Xingfa

Assuming the 90 days trading horizon Zijin Mining is expected to generate 2.82 times less return on investment than Hubei Xingfa. But when comparing it to its historical volatility, Zijin Mining Group is 1.38 times less risky than Hubei Xingfa. It trades about 0.08 of its potential returns per unit of risk. Hubei Xingfa Chemicals is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,802  in Hubei Xingfa Chemicals on September 14, 2024 and sell it today you would earn a total of  469.00  from holding Hubei Xingfa Chemicals or generate 26.03% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy98.28%
ValuesDaily Returns

Zijin Mining Group  vs.  Hubei Xingfa Chemicals

 Performance 
JavaScript chart by amCharts 3.21.15OctNov -1001020
JavaScript chart by amCharts 3.21.15601899 600141
       Timeline  
Zijin Mining Group 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Zijin Mining Group are ranked lower than 5 (%) 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.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec14151617181920
Hubei Xingfa Chemicals 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Hubei Xingfa Chemicals are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hubei Xingfa sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec181920212223242526

Zijin Mining and Hubei Xingfa Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-6.74-5.05-3.36-1.670.01.73.435.166.89 0.020.030.040.050.060.070.08
JavaScript chart by amCharts 3.21.15601899 600141
       Returns  

Pair Trading with Zijin Mining and Hubei Xingfa

The main advantage of trading using opposite Zijin Mining and Hubei Xingfa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zijin Mining position performs unexpectedly, Hubei Xingfa 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 Hubei Xingfa will offset losses from the drop in Hubei Xingfa's long position.
The idea behind Zijin Mining Group and Hubei Xingfa Chemicals 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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