Correlation Between HK Electric and Zijin Mining
Can any of the company-specific risk be diversified away by investing in both HK Electric 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 HK Electric and Zijin Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HK Electric Investments and Zijin Mining Group, you can compare the effects of market volatilities on HK Electric 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 HK Electric with a short position of Zijin Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of HK Electric and Zijin Mining.
Diversification Opportunities for HK Electric and Zijin Mining
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between HKT and Zijin is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding HK Electric Investments 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 HK Electric 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 HK Electric Investments 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 HK Electric i.e., HK Electric and Zijin Mining go up and down completely randomly.
Pair Corralation between HK Electric and Zijin Mining
Assuming the 90 days trading horizon HK Electric Investments is expected to under-perform the Zijin Mining. But the stock apears to be less risky and, when comparing its historical volatility, HK Electric Investments is 3.95 times less risky than Zijin Mining. The stock trades about -0.07 of its potential returns per unit of risk. The Zijin Mining Group is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 181.00 in Zijin Mining Group on December 28, 2024 and sell it today you would earn a total of 32.00 from holding Zijin Mining Group or generate 17.68% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
HK Electric Investments vs. Zijin Mining Group
Performance |
Timeline |
HK Electric Investments |
Zijin Mining Group |
HK Electric and Zijin Mining Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with HK Electric and Zijin Mining
The main advantage of trading using opposite HK Electric and Zijin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HK Electric 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.HK Electric vs. SmarTone Telecommunications Holdings | HK Electric vs. INTERSHOP Communications Aktiengesellschaft | HK Electric vs. Spirent Communications plc | HK Electric vs. Ringmetall SE |
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Check out your portfolio center.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.
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