Correlation Between Zijin Mining and Entravision Communications

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

Diversification Opportunities for Zijin Mining and Entravision Communications

-0.77

Correlation Coefficient

Zijin Mining  Entravision Communications

Pay attention - limited upside

The 3 months correlation between Zijin and Entravision is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and Entravision Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entravision Communications 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 Entravision Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entravision Communications has no effect on the direction of Zijin Mining i.e., Zijin Mining and Entravision Communications go up and down completely randomly.

Pair Corralation between Zijin Mining and Entravision Communications

Assuming the 90 days horizon Zijin Mining Group is expected to generate 0.85 times more return on investment than Entravision Communications. However, Zijin Mining Group is 1.18 times less risky than Entravision Communications. It trades about 0.05 of its potential returns per unit of risk. Entravision Communications is currently generating about -0.01 per unit of risk. If you would invest  98.00  in Zijin Mining Group on October 4, 2024 and sell it today you would earn a total of  83.00  from holding Zijin Mining Group or generate 84.69% return on investment over 90 days.

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

Zijin Mining Group  vs.  Entravision Communications

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 fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Entravision Communications

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Entravision Communications are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Entravision Communications reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zijin Mining and Entravision Communications

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

The idea behind Zijin Mining Group and Entravision Communications 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.