Correlation Between ZIJIN MINING and Japan Steel

Can any of the company-specific risk be diversified away by investing in both ZIJIN MINING and Japan Steel 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 Japan Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ZIJIN MINING H and The Japan Steel, you can compare the effects of market volatilities on ZIJIN MINING and Japan Steel 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 Japan Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZIJIN MINING and Japan Steel.

Diversification Opportunities for ZIJIN MINING and Japan Steel

-0.64

Correlation Coefficient

ZIJIN MINING  Japan Steel

Excellent diversification

The 3 months correlation between ZIJIN and Japan is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding ZIJIN MINING H and The Japan Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Steel 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 H are associated (or correlated) with Japan Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Steel has no effect on the direction of ZIJIN MINING i.e., ZIJIN MINING and Japan Steel go up and down completely randomly.

Pair Corralation between ZIJIN MINING and Japan Steel

Assuming the 90 days trading horizon ZIJIN MINING H is expected to generate 0.81 times more return on investment than Japan Steel. However, ZIJIN MINING H is 1.23 times less risky than Japan Steel. It trades about -0.15 of its potential returns per unit of risk. The Japan Steel is currently generating about -0.22 per unit of risk. If you would invest  189.00  in ZIJIN MINING H on October 9, 2024 and sell it today you would lose (10.00) from holding ZIJIN MINING H or give up 5.29% of portfolio value over 90 days.

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

ZIJIN MINING H   vs.  The Japan Steel

ZIJIN MINING H

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ZIJIN MINING H has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Japan Steel

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Japan Steel are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Japan Steel is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ZIJIN MINING and Japan Steel

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

The idea behind ZIJIN MINING H and The Japan Steel 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.