Correlation Between GigaMedia and Zijin Mining

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

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

Diversification Opportunities for GigaMedia and Zijin Mining

-0.77

Correlation Coefficient

GigaMedia  Zijin Mining

Pay attention - limited upside

The 3 months correlation between GigaMedia and Zijin is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding GigaMedia 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 GigaMedia 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 GigaMedia 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 GigaMedia i.e., GigaMedia and Zijin Mining go up and down completely randomly.

Pair Corralation between GigaMedia and Zijin Mining

Assuming the 90 days trading horizon GigaMedia is expected to generate 3.64 times less return on investment than Zijin Mining. But when comparing it to its historical volatility, GigaMedia is 2.2 times less risky than Zijin Mining. It trades about 0.03 of its potential returns per unit of risk. Zijin Mining Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  98.00  in Zijin Mining Group on October 4, 2024 and sell it today you would earn a total of  83.00  from holding Zijin Mining Group or generate 84.69% return on investment over 90 days.

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

GigaMedia  vs.  Zijin Mining Group

GigaMedia

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GigaMedia are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, GigaMedia unveiled 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 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.

Pair Trading with GigaMedia and Zijin Mining

The main advantage of trading using opposite GigaMedia and Zijin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GigaMedia 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 GigaMedia 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.