Correlation Between PREMIER FOODS and ZIJIN MINING

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

By analyzing existing cross correlation between PREMIER FOODS and ZIJIN MINING H , you can compare the effects of market volatilities on PREMIER FOODS and ZIJIN MINING 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 PREMIER FOODS with a short position of ZIJIN MINING. Check out your portfolio center. Please also check ongoing floating volatility patterns of PREMIER FOODS and ZIJIN MINING.

Diversification Opportunities for PREMIER FOODS and ZIJIN MINING

-0.15

Correlation Coefficient

PREMIER FOODS  ZIJIN MINING

Good diversification

The 3 months correlation between PREMIER and ZIJIN is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding PREMIER FOODS and ZIJIN MINING H in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZIJIN MINING H and PREMIER FOODS 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 PREMIER FOODS are associated (or correlated) with ZIJIN MINING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZIJIN MINING H has no effect on the direction of PREMIER FOODS i.e., PREMIER FOODS and ZIJIN MINING go up and down completely randomly.

Pair Corralation between PREMIER FOODS and ZIJIN MINING

Assuming the 90 days trading horizon PREMIER FOODS is expected to under-perform the ZIJIN MINING. But the stock apears to be less risky and, when comparing its historical volatility, PREMIER FOODS is 1.58 times less risky than ZIJIN MINING. The stock trades about -0.02 of its potential returns per unit of risk. The ZIJIN MINING H is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  176.00  in ZIJIN MINING H on December 23, 2024 and sell it today you would earn a total of  28.00  from holding ZIJIN MINING H or generate 15.91% return on investment over 90 days.

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

PREMIER FOODS  vs.  ZIJIN MINING H

PREMIER FOODS

Risk-Adjusted Performance

Very Weak

Over the last 90 days PREMIER FOODS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, PREMIER FOODS is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

ZIJIN MINING H

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ZIJIN MINING H are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, ZIJIN MINING unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PREMIER FOODS and ZIJIN MINING

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

The idea behind PREMIER FOODS and ZIJIN MINING H 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.