Correlation Between Wheaton Precious and Zijin Mining

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

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

Diversification Opportunities for Wheaton Precious and Zijin Mining

0.81

Correlation Coefficient

Wheaton Precious  Zijin Mining

Very poor diversification

The 3 months correlation between Wheaton and Zijin is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals 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 Wheaton Precious 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 Wheaton Precious Metals 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 Wheaton Precious i.e., Wheaton Precious and Zijin Mining go up and down completely randomly.

Pair Corralation between Wheaton Precious and Zijin Mining

Considering the 90-day investment horizon Wheaton Precious Metals is expected to generate 0.76 times more return on investment than Zijin Mining. However, Wheaton Precious Metals is 1.32 times less risky than Zijin Mining. It trades about 0.3 of its potential returns per unit of risk. Zijin Mining Group is currently generating about 0.19 per unit of risk. If you would invest  5,711  in Wheaton Precious Metals on December 20, 2024 and sell it today you would earn a total of  1,906  from holding Wheaton Precious Metals or generate 33.37% return on investment over 90 days.

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

Wheaton Precious Metals  vs.  Zijin Mining Group

Wheaton Precious Metals

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Wheaton Precious Metals are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Wheaton Precious displayed solid returns over the last few months and may actually be approaching a breakup point.

Zijin Mining Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zijin Mining Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain primary indicators, Zijin Mining showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wheaton Precious and Zijin Mining

The main advantage of trading using opposite Wheaton Precious and Zijin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wheaton Precious 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 Wheaton Precious Metals 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.

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 Money Managers module to screen money managers from public funds and ETFs managed around the world.