Correlation Between Zijin Mining and Thyssenkrupp

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

Diversification Opportunities for Zijin Mining and Thyssenkrupp

-0.58

Correlation Coefficient

Zijin Mining  Thyssenkrupp

Excellent diversification

The 3 months correlation between Zijin and Thyssenkrupp is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and thyssenkrupp AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on thyssenkrupp AG 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 Thyssenkrupp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of thyssenkrupp AG has no effect on the direction of Zijin Mining i.e., Zijin Mining and Thyssenkrupp go up and down completely randomly.

Pair Corralation between Zijin Mining and Thyssenkrupp

Assuming the 90 days horizon Zijin Mining Group is expected to under-perform the Thyssenkrupp. In addition to that, Zijin Mining is 1.37 times more volatile than thyssenkrupp AG. It trades about -0.08 of its total potential returns per unit of risk. thyssenkrupp AG is currently generating about 0.02 per unit of volatility. If you would invest  386.00  in thyssenkrupp AG on October 8, 2024 and sell it today you would earn a total of  2.00  from holding thyssenkrupp AG or generate 0.52% return on investment over 90 days.

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

Zijin Mining Group  vs.  thyssenkrupp AG

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 latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

thyssenkrupp AG

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in thyssenkrupp AG are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Thyssenkrupp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zijin Mining and Thyssenkrupp

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

The idea behind Zijin Mining Group and thyssenkrupp 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.