Correlation Between Zijin Mining and Shenandoah Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both Zijin Mining and Shenandoah Telecommunicatio 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 Shenandoah Telecommunicatio 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 Shenandoah Telecommunications, you can compare the effects of market volatilities on Zijin Mining and Shenandoah Telecommunicatio 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 Shenandoah Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zijin Mining and Shenandoah Telecommunicatio.
Diversification Opportunities for Zijin Mining and Shenandoah Telecommunicatio
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Zijin and Shenandoah is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and Shenandoah Telecommunications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenandoah Telecommunicatio 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 Shenandoah Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenandoah Telecommunicatio has no effect on the direction of Zijin Mining i.e., Zijin Mining and Shenandoah Telecommunicatio go up and down completely randomly.
Pair Corralation between Zijin Mining and Shenandoah Telecommunicatio
Assuming the 90 days horizon Zijin Mining Group is expected to generate 1.15 times more return on investment than Shenandoah Telecommunicatio. However, Zijin Mining is 1.15 times more volatile than Shenandoah Telecommunications. It trades about 0.06 of its potential returns per unit of risk. Shenandoah Telecommunications is currently generating about -0.01 per unit of risk. If you would invest 93.00 in Zijin Mining Group on October 5, 2024 and sell it today you would earn a total of 88.00 from holding Zijin Mining Group or generate 94.62% 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. Shenandoah Telecommunications
Performance |
Timeline |
Zijin Mining Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Shenandoah Telecommunicatio |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Zijin Mining and Shenandoah Telecommunicatio Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Zijin Mining and Shenandoah Telecommunicatio
The main advantage of trading using opposite Zijin Mining and Shenandoah Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zijin Mining position performs unexpectedly, Shenandoah Telecommunicatio 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 Shenandoah Telecommunicatio will offset losses from the drop in Shenandoah Telecommunicatio's long position.The idea behind Zijin Mining Group and Shenandoah Telecommunications 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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