Correlation Between Zijin Mining and Gladstone Investment

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

Diversification Opportunities for Zijin Mining and Gladstone Investment

-0.27

Correlation Coefficient

Zijin Mining  Gladstone Investment

Very good diversification

The 3 months correlation between Zijin and Gladstone is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and Gladstone Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Investment 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 Gladstone Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladstone Investment has no effect on the direction of Zijin Mining i.e., Zijin Mining and Gladstone Investment go up and down completely randomly.

Pair Corralation between Zijin Mining and Gladstone Investment

Assuming the 90 days horizon Zijin Mining Group is expected to under-perform the Gladstone Investment. In addition to that, Zijin Mining is 2.28 times more volatile than Gladstone Investment. It trades about -0.03 of its total potential returns per unit of risk. Gladstone Investment is currently generating about 0.02 per unit of volatility. If you would invest  1,260  in Gladstone Investment on October 10, 2024 and sell it today you would earn a total of  6.00  from holding Gladstone Investment or generate 0.48% return on investment over 90 days.

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

Zijin Mining Group  vs.  Gladstone Investment

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 latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Gladstone Investment

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Zijin Mining and Gladstone Investment

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

The idea behind Zijin Mining Group and Gladstone Investment 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.