Correlation Between Zijin Mining and Blue Star

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

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

Diversification Opportunities for Zijin Mining and Blue Star

0.46

Correlation Coefficient

Zijin Mining  Blue Star

Very weak diversification

The 3 months correlation between Zijin and Blue is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and Blue Star Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Star Gold and Zijin Mining 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 Zijin Mining Group are associated (or correlated) with Blue Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Star Gold has no effect on the direction of Zijin Mining i.e., Zijin Mining and Blue Star go up and down completely randomly.

Pair Corralation between Zijin Mining and Blue Star

Assuming the 90 days horizon Zijin Mining Group is expected to generate 1.43 times more return on investment than Blue Star. However, Zijin Mining is 1.43 times more volatile than Blue Star Gold. It trades about 0.13 of its potential returns per unit of risk. Blue Star Gold is currently generating about -0.22 per unit of risk. If you would invest  185.00  in Zijin Mining Group on October 24, 2024 and sell it today you would earn a total of  13.00  from holding Zijin Mining Group or generate 7.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	90.0%
Values	Daily Returns

Zijin Mining Group  vs.  Blue Star Gold

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 latest fragile performance, the Stock's primary indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Blue Star Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blue Star Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Blue Star is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Zijin Mining and Blue Star

The main advantage of trading using opposite Zijin Mining and Blue Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zijin Mining position performs unexpectedly, Blue Star 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 Blue Star will offset losses from the drop in Blue Star's long position.

The idea behind Zijin Mining Group and Blue Star Gold 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.