Correlation Between Zijin Mining and Perseus Mining

Can any of the company-specific risk be diversified away by investing in both Zijin Mining and Perseus 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 Zijin Mining and Perseus Mining 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 Perseus Mining Limited, you can compare the effects of market volatilities on Zijin Mining and Perseus 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 Zijin Mining with a short position of Perseus Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zijin Mining and Perseus Mining.

Diversification Opportunities for Zijin Mining and Perseus Mining

0.6

Correlation Coefficient

Zijin Mining  Perseus Mining

Poor diversification

The 3 months correlation between Zijin and Perseus is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and Perseus Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perseus Mining 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 Perseus Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perseus Mining has no effect on the direction of Zijin Mining i.e., Zijin Mining and Perseus Mining go up and down completely randomly.

Pair Corralation between Zijin Mining and Perseus Mining

Assuming the 90 days horizon Zijin Mining Group is expected to generate 2.81 times more return on investment than Perseus Mining. However, Zijin Mining is 2.81 times more volatile than Perseus Mining Limited. It trades about 0.06 of its potential returns per unit of risk. Perseus Mining Limited is currently generating about 0.03 per unit of risk. If you would invest  95.00  in Zijin Mining Group on September 21, 2024 and sell it today you would earn a total of  90.00  from holding Zijin Mining Group or generate 94.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	93.15%
Values	Daily Returns

Zijin Mining Group  vs.  Perseus Mining Limited

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 nearly stable primary indicators, Zijin Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Perseus Mining

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Perseus Mining Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Zijin Mining and Perseus Mining

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

The idea behind Zijin Mining Group and Perseus Mining Limited 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.