Correlation Between Zijin Mining and Hanover Insurance

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

Diversification Opportunities for Zijin Mining and Hanover Insurance

-0.02

Correlation Coefficient

Zijin Mining  Hanover Insurance

Good diversification

The 3 months correlation between Zijin and Hanover is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance 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 Hanover Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanover Insurance has no effect on the direction of Zijin Mining i.e., Zijin Mining and Hanover Insurance go up and down completely randomly.

Pair Corralation between Zijin Mining and Hanover Insurance

Assuming the 90 days horizon Zijin Mining Group is expected to generate 2.18 times more return on investment than Hanover Insurance. However, Zijin Mining is 2.18 times more volatile than The Hanover Insurance. It trades about 0.06 of its potential returns per unit of risk. The Hanover Insurance is currently generating about 0.04 per unit of risk. If you would invest  88.00  in Zijin Mining Group on September 3, 2024 and sell it today you would earn a total of  89.00  from holding Zijin Mining Group or generate 101.14% 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.  The Hanover Insurance

Zijin Mining Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Zijin Mining Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Zijin Mining may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Hanover Insurance

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Hanover Insurance are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Hanover Insurance reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zijin Mining and Hanover Insurance

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

The idea behind Zijin Mining Group and The Hanover Insurance 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.