Correlation Between Zijin Mining and Cumberland Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Zijin Mining and Cumberland Pharmaceuticals 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 Cumberland Pharmaceuticals 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 Cumberland Pharmaceuticals, you can compare the effects of market volatilities on Zijin Mining and Cumberland Pharmaceuticals 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 Cumberland Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zijin Mining and Cumberland Pharmaceuticals.
Diversification Opportunities for Zijin Mining and Cumberland Pharmaceuticals
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Zijin and Cumberland is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and Cumberland Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cumberland Pharmaceuticals 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 Cumberland Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cumberland Pharmaceuticals has no effect on the direction of Zijin Mining i.e., Zijin Mining and Cumberland Pharmaceuticals go up and down completely randomly.
Pair Corralation between Zijin Mining and Cumberland Pharmaceuticals
Assuming the 90 days horizon Zijin Mining is expected to generate 3.74 times less return on investment than Cumberland Pharmaceuticals. But when comparing it to its historical volatility, Zijin Mining Group is 4.18 times less risky than Cumberland Pharmaceuticals. It trades about 0.14 of its potential returns per unit of risk. Cumberland Pharmaceuticals is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 242.00 in Cumberland Pharmaceuticals on December 30, 2024 and sell it today you would earn a total of 199.00 from holding Cumberland Pharmaceuticals or generate 82.23% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Zijin Mining Group vs. Cumberland Pharmaceuticals
Performance |
Timeline |
Zijin Mining Group |
Cumberland Pharmaceuticals |
Zijin Mining and Cumberland Pharmaceuticals Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Zijin Mining and Cumberland Pharmaceuticals
The main advantage of trading using opposite Zijin Mining and Cumberland Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zijin Mining position performs unexpectedly, Cumberland Pharmaceuticals 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 Cumberland Pharmaceuticals will offset losses from the drop in Cumberland Pharmaceuticals' long position.Zijin Mining vs. Torex Gold Resources | Zijin Mining vs. Wesdome Gold Mines | Zijin Mining vs. Northern Star Resources | Zijin Mining vs. Regis Resources |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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