Correlation Between NMI Holdings and ZIJIN MINH

Can any of the company-specific risk be diversified away by investing in both NMI Holdings and ZIJIN MINH 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 NMI Holdings and ZIJIN MINH into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NMI Holdings and ZIJIN MINH UNSPADR20, you can compare the effects of market volatilities on NMI Holdings and ZIJIN MINH 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 NMI Holdings with a short position of ZIJIN MINH. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and ZIJIN MINH.

Diversification Opportunities for NMI Holdings and ZIJIN MINH

0.28

Correlation Coefficient

NMI Holdings  ZIJIN MINH

Modest diversification

The 3 months correlation between NMI and ZIJIN is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and ZIJIN MINH UNSPADR20 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZIJIN MINH UNSPADR20 and NMI Holdings 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 NMI Holdings are associated (or correlated) with ZIJIN MINH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZIJIN MINH UNSPADR20 has no effect on the direction of NMI Holdings i.e., NMI Holdings and ZIJIN MINH go up and down completely randomly.

Pair Corralation between NMI Holdings and ZIJIN MINH

Assuming the 90 days horizon NMI Holdings is expected to generate 4.8 times less return on investment than ZIJIN MINH. But when comparing it to its historical volatility, NMI Holdings is 2.11 times less risky than ZIJIN MINH. It trades about 0.04 of its potential returns per unit of risk. ZIJIN MINH UNSPADR20 is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2,980  in ZIJIN MINH UNSPADR20 on September 12, 2024 and sell it today you would earn a total of  620.00  from holding ZIJIN MINH UNSPADR20 or generate 20.81% return on investment over 90 days.

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

NMI Holdings  vs.  ZIJIN MINH UNSPADR20

NMI Holdings

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NMI Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, NMI Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

ZIJIN MINH UNSPADR20

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ZIJIN MINH UNSPADR20 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, ZIJIN MINH reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NMI Holdings and ZIJIN MINH

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

The idea behind NMI Holdings and ZIJIN MINH UNSPADR20 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 Anywhere module to track or share privately all of your investments from the convenience of any device.