Correlation Between Zhejiang Huayou and Zijin Mining

Can any of the company-specific risk be diversified away by investing in both Zhejiang Huayou and Zijin Mining 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 Zhejiang Huayou and Zijin Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Zhejiang Huayou Cobalt and Zijin Mining Group, you can compare the effects of market volatilities on Zhejiang Huayou and Zijin Mining 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 Zhejiang Huayou with a short position of Zijin Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhejiang Huayou and Zijin Mining.

Diversification Opportunities for Zhejiang Huayou and Zijin Mining

-0.07

Correlation Coefficient

Zhejiang Huayou  Zijin Mining

Good diversification

The 3 months correlation between Zhejiang and Zijin is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Zhejiang Huayou Cobalt and Zijin Mining Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zijin Mining Group and Zhejiang Huayou 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 Zhejiang Huayou Cobalt are associated (or correlated) with Zijin Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zijin Mining Group has no effect on the direction of Zhejiang Huayou i.e., Zhejiang Huayou and Zijin Mining go up and down completely randomly.

Pair Corralation between Zhejiang Huayou and Zijin Mining

Assuming the 90 days trading horizon Zhejiang Huayou Cobalt is expected to under-perform the Zijin Mining. In addition to that, Zhejiang Huayou is 1.28 times more volatile than Zijin Mining Group. It trades about -0.04 of its total potential returns per unit of risk. Zijin Mining Group is currently generating about 0.04 per unit of volatility. If you would invest  1,125  in Zijin Mining Group on September 28, 2024 and sell it today you would earn a total of  437.00  from holding Zijin Mining Group or generate 38.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

Zhejiang Huayou Cobalt  vs.  Zijin Mining Group

Zhejiang Huayou Cobalt

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Zhejiang Huayou Cobalt are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Zhejiang Huayou is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with Zhejiang Huayou and Zijin Mining

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

The idea behind Zhejiang Huayou Cobalt and Zijin Mining Group 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.