Correlation Between Gold Reserve and Zijin Mining

Can any of the company-specific risk be diversified away by investing in both Gold Reserve 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 Gold Reserve and Zijin Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gold Reserve and Zijin Mining Group, you can compare the effects of market volatilities on Gold Reserve 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 Gold Reserve with a short position of Zijin Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Reserve and Zijin Mining.

Diversification Opportunities for Gold Reserve and Zijin Mining

0.72

Correlation Coefficient

Gold Reserve  Zijin Mining

Poor diversification

The 3 months correlation between Gold and Zijin is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Gold Reserve and Zijin Mining Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zijin Mining Group and Gold Reserve 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 Gold Reserve 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 Group has no effect on the direction of Gold Reserve i.e., Gold Reserve and Zijin Mining go up and down completely randomly.

Pair Corralation between Gold Reserve and Zijin Mining

Assuming the 90 days horizon Gold Reserve is expected to under-perform the Zijin Mining. In addition to that, Gold Reserve is 1.67 times more volatile than Zijin Mining Group. It trades about -0.08 of its total potential returns per unit of risk. Zijin Mining Group is currently generating about 0.01 per unit of volatility. If you would invest  191.00  in Zijin Mining Group on September 29, 2024 and sell it today you would lose (6.00) from holding Zijin Mining Group or give up 3.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Gold Reserve  vs.  Zijin Mining Group

Gold Reserve

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Reserve are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Gold Reserve reported solid returns over the last few months and may actually be approaching a breakup point.

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 primary indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Gold Reserve and Zijin Mining

The main advantage of trading using opposite Gold Reserve and Zijin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Reserve 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 Gold Reserve and Zijin Mining Group 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.