Correlation Between Barrick Gold and Zhaojin Mining

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

By analyzing existing cross correlation between Barrick Gold and Zhaojin Mining Industry, you can compare the effects of market volatilities on Barrick Gold and Zhaojin 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 Barrick Gold with a short position of Zhaojin Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barrick Gold and Zhaojin Mining.

Diversification Opportunities for Barrick Gold and Zhaojin Mining

0.88

Correlation Coefficient

Barrick Gold  Zhaojin Mining

Very poor diversification

The 3 months correlation between Barrick and Zhaojin is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Barrick Gold and Zhaojin Mining Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhaojin Mining Industry and Barrick Gold 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 Barrick Gold are associated (or correlated) with Zhaojin Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhaojin Mining Industry has no effect on the direction of Barrick Gold i.e., Barrick Gold and Zhaojin Mining go up and down completely randomly.

Pair Corralation between Barrick Gold and Zhaojin Mining

Assuming the 90 days horizon Barrick Gold is expected to generate 0.5 times more return on investment than Zhaojin Mining. However, Barrick Gold is 2.01 times less risky than Zhaojin Mining. It trades about -0.13 of its potential returns per unit of risk. Zhaojin Mining Industry is currently generating about -0.06 per unit of risk. If you would invest  1,710  in Barrick Gold on October 6, 2024 and sell it today you would lose (166.00) from holding Barrick Gold or give up 9.71% of portfolio value over 90 days.

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

Barrick Gold  vs.  Zhaojin Mining Industry

Barrick Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Barrick Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Zhaojin Mining Industry

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zhaojin Mining Industry has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Barrick Gold and Zhaojin Mining

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

The idea behind Barrick Gold and Zhaojin Mining Industry 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.

Check out your portfolio center.

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.