Correlation Between Zijin Mining and Tower Semiconductor

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

Diversification Opportunities for Zijin Mining and Tower Semiconductor

-0.57

Correlation Coefficient

Zijin Mining  Tower Semiconductor

Excellent diversification

The 3 months correlation between Zijin and Tower is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and Tower Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tower Semiconductor 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 Tower Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tower Semiconductor has no effect on the direction of Zijin Mining i.e., Zijin Mining and Tower Semiconductor go up and down completely randomly.

Pair Corralation between Zijin Mining and Tower Semiconductor

Assuming the 90 days horizon Zijin Mining Group is expected to generate 1.0 times more return on investment than Tower Semiconductor. However, Zijin Mining is 1.0 times more volatile than Tower Semiconductor. It trades about 0.11 of its potential returns per unit of risk. Tower Semiconductor is currently generating about -0.18 per unit of risk. If you would invest  181.00  in Zijin Mining Group on December 28, 2024 and sell it today you would earn a total of  32.00  from holding Zijin Mining Group or generate 17.68% 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.  Tower Semiconductor

Zijin Mining Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zijin Mining Group are ranked lower than 8 (%) 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.

Tower Semiconductor

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tower Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Zijin Mining and Tower Semiconductor

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

The idea behind Zijin Mining Group and Tower Semiconductor 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.