Correlation Between TRADEGATE and Zijin Mining

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

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

Diversification Opportunities for TRADEGATE and Zijin Mining

-0.32

Correlation Coefficient

TRADEGATE  Zijin Mining

Very good diversification

The 3 months correlation between TRADEGATE and Zijin is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding TRADEGATE 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 TRADEGATE 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 TRADEGATE 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 TRADEGATE i.e., TRADEGATE and Zijin Mining go up and down completely randomly.

Pair Corralation between TRADEGATE and Zijin Mining

Assuming the 90 days trading horizon TRADEGATE is expected to generate 0.04 times more return on investment than Zijin Mining. However, TRADEGATE is 22.29 times less risky than Zijin Mining. It trades about 0.32 of its potential returns per unit of risk. Zijin Mining Group is currently generating about -0.09 per unit of risk. If you would invest  8,950  in TRADEGATE on September 3, 2024 and sell it today you would earn a total of  100.00  from holding TRADEGATE or generate 1.12% return on investment over 90 days.

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

TRADEGATE  vs.  Zijin Mining Group

TRADEGATE

Risk-Adjusted Performance

0 of 100

Very Weak

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

Zijin Mining Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Zijin Mining Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Zijin Mining may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with TRADEGATE and Zijin Mining

The main advantage of trading using opposite TRADEGATE and Zijin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRADEGATE 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 TRADEGATE 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 Global Correlations module to find global opportunities by holding instruments from different markets.