Correlation Between Zijin Mining and Prosus NV

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

Diversification Opportunities for Zijin Mining and Prosus NV

0.8

Correlation Coefficient

Zijin Mining  Prosus NV

Very poor diversification

The 3 months correlation between Zijin and Prosus is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and Prosus NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosus NV 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 Prosus NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prosus NV has no effect on the direction of Zijin Mining i.e., Zijin Mining and Prosus NV go up and down completely randomly.

Pair Corralation between Zijin Mining and Prosus NV

Assuming the 90 days horizon Zijin Mining Group is expected to generate 2.19 times more return on investment than Prosus NV. However, Zijin Mining is 2.19 times more volatile than Prosus NV. It trades about 0.07 of its potential returns per unit of risk. Prosus NV is currently generating about 0.14 per unit of risk. If you would invest  156.00  in Zijin Mining Group on September 4, 2024 and sell it today you would earn a total of  21.00  from holding Zijin Mining Group or generate 13.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.46%
Values	Daily Returns

Zijin Mining Group  vs.  Prosus NV

Zijin Mining Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Zijin Mining Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Zijin Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Prosus NV

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Prosus NV are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Prosus NV reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zijin Mining and Prosus NV

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

The idea behind Zijin Mining Group and Prosus NV 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.