Correlation Between Zijin Mining and Zapp Electric

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

Diversification Opportunities for Zijin Mining and Zapp Electric

0.3

Correlation Coefficient

Zijin Mining  Zapp Electric

Weak diversification

The 3 months correlation between Zijin and Zapp is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and Zapp Electric Vehicles in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zapp Electric Vehicles 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 Zapp Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zapp Electric Vehicles has no effect on the direction of Zijin Mining i.e., Zijin Mining and Zapp Electric go up and down completely randomly.

Pair Corralation between Zijin Mining and Zapp Electric

Assuming the 90 days horizon Zijin Mining is expected to generate 15.15 times less return on investment than Zapp Electric. But when comparing it to its historical volatility, Zijin Mining Group is 2.94 times less risky than Zapp Electric. It trades about 0.01 of its potential returns per unit of risk. Zapp Electric Vehicles is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1.00  in Zapp Electric Vehicles on October 12, 2024 and sell it today you would earn a total of  0.00  from holding Zapp Electric Vehicles or generate 0.0% return on investment over 90 days.

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

Zijin Mining Group  vs.  Zapp Electric Vehicles

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.

Zapp Electric Vehicles

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Zapp Electric Vehicles are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Zapp Electric showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zijin Mining and Zapp Electric

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

The idea behind Zijin Mining Group and Zapp Electric Vehicles 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.