Correlation Between Eldorado Gold and Zijin Mining

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

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

Diversification Opportunities for Eldorado Gold and Zijin Mining

0.35

Correlation Coefficient

Eldorado Gold  Zijin Mining

Weak diversification

The 3 months correlation between Eldorado and Zijin is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Eldorado Gold Corp 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 Eldorado 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 Eldorado Gold Corp 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 Eldorado Gold i.e., Eldorado Gold and Zijin Mining go up and down completely randomly.

Pair Corralation between Eldorado Gold and Zijin Mining

Considering the 90-day investment horizon Eldorado Gold is expected to generate 1.48 times less return on investment than Zijin Mining. In addition to that, Eldorado Gold is 1.25 times more volatile than Zijin Mining Group. It trades about 0.09 of its total potential returns per unit of risk. Zijin Mining Group is currently generating about 0.16 per unit of volatility. If you would invest  3,721  in Zijin Mining Group on December 30, 2024 and sell it today you would earn a total of  909.00  from holding Zijin Mining Group or generate 24.43% return on investment over 90 days.

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

Eldorado Gold Corp  vs.  Zijin Mining Group

Eldorado Gold Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eldorado Gold Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile technical and fundamental indicators, Eldorado Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

Zijin Mining Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zijin Mining Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain primary indicators, Zijin Mining showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eldorado Gold and Zijin Mining

The main advantage of trading using opposite Eldorado Gold and Zijin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eldorado Gold 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 Eldorado Gold Corp 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.