Correlation Between Zijin Mining and Inner Mongolia

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

Diversification Opportunities for Zijin Mining and Inner Mongolia

-0.73

Correlation Coefficient

Zijin Mining  Inner Mongolia

Pay attention - limited upside

The 3 months correlation between Zijin and Inner is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and Inner Mongolia Junzheng in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inner Mongolia Junzheng 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 Inner Mongolia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inner Mongolia Junzheng has no effect on the direction of Zijin Mining i.e., Zijin Mining and Inner Mongolia go up and down completely randomly.

Pair Corralation between Zijin Mining and Inner Mongolia

Assuming the 90 days trading horizon Zijin Mining Group is expected to under-perform the Inner Mongolia. But the stock apears to be less risky and, when comparing its historical volatility, Zijin Mining Group is 3.35 times less risky than Inner Mongolia. The stock trades about -0.07 of its potential returns per unit of risk. The Inner Mongolia Junzheng is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  493.00  in Inner Mongolia Junzheng on October 2, 2024 and sell it today you would earn a total of  33.00  from holding Inner Mongolia Junzheng or generate 6.69% 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.  Inner Mongolia Junzheng

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.

Inner Mongolia Junzheng

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Inner Mongolia Junzheng are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Inner Mongolia sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zijin Mining and Inner Mongolia

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

The idea behind Zijin Mining Group and Inner Mongolia Junzheng 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.