Correlation Between Zijin Mining and VOLKSWAGEN

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

Diversification Opportunities for Zijin Mining and VOLKSWAGEN

0.61

Correlation Coefficient

Zijin Mining  VOLKSWAGEN

Poor diversification

The 3 months correlation between Zijin and VOLKSWAGEN is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and VOLKSWAGEN AG VZ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VOLKSWAGEN AG VZ 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 VOLKSWAGEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VOLKSWAGEN AG VZ has no effect on the direction of Zijin Mining i.e., Zijin Mining and VOLKSWAGEN go up and down completely randomly.

Pair Corralation between Zijin Mining and VOLKSWAGEN

Assuming the 90 days horizon Zijin Mining Group is expected to under-perform the VOLKSWAGEN. In addition to that, Zijin Mining is 2.5 times more volatile than VOLKSWAGEN AG VZ. It trades about -0.06 of its total potential returns per unit of risk. VOLKSWAGEN AG VZ is currently generating about -0.08 per unit of volatility. If you would invest  920.00  in VOLKSWAGEN AG VZ on October 7, 2024 and sell it today you would lose (65.00) from holding VOLKSWAGEN AG VZ or give up 7.07% of portfolio value over 90 days.

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

Zijin Mining Group  vs.  VOLKSWAGEN AG VZ

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 fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

VOLKSWAGEN AG VZ

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VOLKSWAGEN AG VZ has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain 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.

Pair Trading with Zijin Mining and VOLKSWAGEN

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

The idea behind Zijin Mining Group and VOLKSWAGEN AG VZ 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.