Correlation Between Zijin Mining and Mitsubishi UFJ

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

Diversification Opportunities for Zijin Mining and Mitsubishi UFJ

0.31

Correlation Coefficient

Zijin Mining  Mitsubishi UFJ

Weak diversification

The 3 months correlation between Zijin and Mitsubishi is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and Mitsubishi UFJ Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi UFJ Financial 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 Mitsubishi UFJ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi UFJ Financial has no effect on the direction of Zijin Mining i.e., Zijin Mining and Mitsubishi UFJ go up and down completely randomly.

Pair Corralation between Zijin Mining and Mitsubishi UFJ

Assuming the 90 days horizon Zijin Mining is expected to generate 1.2 times less return on investment than Mitsubishi UFJ. In addition to that, Zijin Mining is 1.94 times more volatile than Mitsubishi UFJ Financial. It trades about 0.07 of its total potential returns per unit of risk. Mitsubishi UFJ Financial is currently generating about 0.15 per unit of volatility. If you would invest  1,080  in Mitsubishi UFJ Financial on November 20, 2024 and sell it today you would earn a total of  140.00  from holding Mitsubishi UFJ Financial or generate 12.96% return on investment over 90 days.

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

Zijin Mining Group  vs.  Mitsubishi UFJ Financial

Zijin Mining Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Zijin Mining Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Zijin Mining may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Mitsubishi UFJ Financial

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsubishi UFJ Financial are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Mitsubishi UFJ unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zijin Mining and Mitsubishi UFJ

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

The idea behind Zijin Mining Group and Mitsubishi UFJ Financial 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.