Correlation Between Zijin Mining and Iron Road
Can any of the company-specific risk be diversified away by investing in both Zijin Mining and Iron Road 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 Iron Road 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 Iron Road Limited, you can compare the effects of market volatilities on Zijin Mining and Iron Road 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 Iron Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zijin Mining and Iron Road.
Diversification Opportunities for Zijin Mining and Iron Road
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Zijin and Iron is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and Iron Road Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iron Road Limited 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 Iron Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iron Road Limited has no effect on the direction of Zijin Mining i.e., Zijin Mining and Iron Road go up and down completely randomly.
Pair Corralation between Zijin Mining and Iron Road
Assuming the 90 days horizon Zijin Mining Group is expected to generate 0.87 times more return on investment than Iron Road. However, Zijin Mining Group is 1.15 times less risky than Iron Road. It trades about -0.06 of its potential returns per unit of risk. Iron Road Limited is currently generating about -0.12 per unit of risk. If you would invest 179.00 in Zijin Mining Group on September 25, 2024 and sell it today you would lose (8.00) from holding Zijin Mining Group or give up 4.47% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Zijin Mining Group vs. Iron Road Limited
Performance |
Timeline |
Zijin Mining Group |
Iron Road Limited |
Zijin Mining and Iron Road Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Zijin Mining and Iron Road
The main advantage of trading using opposite Zijin Mining and Iron Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zijin Mining position performs unexpectedly, Iron Road 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 Iron Road will offset losses from the drop in Iron Road's long position.Zijin Mining vs. Chunghwa Telecom Co | Zijin Mining vs. Verizon Communications | Zijin Mining vs. Zoom Video Communications | Zijin Mining vs. Iridium Communications |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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