Correlation Between Zijin Mining and Halliburton

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

Diversification Opportunities for Zijin Mining and Halliburton

-0.22

Correlation Coefficient

Zijin Mining  Halliburton

Very good diversification

The 3 months correlation between Zijin and Halliburton is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and Halliburton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halliburton 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 Halliburton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Halliburton has no effect on the direction of Zijin Mining i.e., Zijin Mining and Halliburton go up and down completely randomly.

Pair Corralation between Zijin Mining and Halliburton

Assuming the 90 days horizon Zijin Mining Group is expected to generate 1.71 times more return on investment than Halliburton. However, Zijin Mining is 1.71 times more volatile than Halliburton. It trades about 0.06 of its potential returns per unit of risk. Halliburton is currently generating about 0.08 per unit of risk. If you would invest  166.00  in Zijin Mining Group on September 14, 2024 and sell it today you would earn a total of  18.00  from holding Zijin Mining Group or generate 10.84% 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.  Halliburton

Zijin Mining Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Zijin Mining Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Zijin Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Halliburton

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Halliburton are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady essential indicators, Halliburton may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Zijin Mining and Halliburton

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

The idea behind Zijin Mining Group and Halliburton 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.