Correlation Between Zijin Mining and Heidelberg Pharma

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

Diversification Opportunities for Zijin Mining and Heidelberg Pharma

0.04

Correlation Coefficient

Zijin Mining  Heidelberg Pharma

Significant diversification

The 3 months correlation between Zijin and Heidelberg is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and Heidelberg Pharma AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heidelberg Pharma 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 Heidelberg Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heidelberg Pharma has no effect on the direction of Zijin Mining i.e., Zijin Mining and Heidelberg Pharma go up and down completely randomly.

Pair Corralation between Zijin Mining and Heidelberg Pharma

Assuming the 90 days horizon Zijin Mining Group is expected to generate 0.97 times more return on investment than Heidelberg Pharma. However, Zijin Mining Group is 1.03 times less risky than Heidelberg Pharma. It trades about 0.15 of its potential returns per unit of risk. Heidelberg Pharma AG is currently generating about 0.08 per unit of risk. If you would invest  167.00  in Zijin Mining Group on December 22, 2024 and sell it today you would earn a total of  42.00  from holding Zijin Mining Group or generate 25.15% return on investment over 90 days.

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

Zijin Mining Group  vs.  Heidelberg Pharma AG

Zijin Mining Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zijin Mining Group are ranked lower than 11 (%) 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.

Heidelberg Pharma

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Heidelberg Pharma AG are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Heidelberg Pharma exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zijin Mining and Heidelberg Pharma

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

The idea behind Zijin Mining Group and Heidelberg Pharma AG 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 Commodity Directory module to find actively traded commodities issued by global exchanges.