Correlation Between Zijin Mining and Argo Gold

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

Diversification Opportunities for Zijin Mining and Argo Gold

0.52

Correlation Coefficient

Zijin Mining  Argo Gold

Very weak diversification

The 3 months correlation between Zijin and Argo is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and Argo Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argo 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 Argo Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argo Gold has no effect on the direction of Zijin Mining i.e., Zijin Mining and Argo Gold go up and down completely randomly.

Pair Corralation between Zijin Mining and Argo Gold

Assuming the 90 days horizon Zijin Mining is expected to generate 1.21 times less return on investment than Argo Gold. But when comparing it to its historical volatility, Zijin Mining Group is 1.76 times less risky than Argo Gold. It trades about 0.03 of its potential returns per unit of risk. Argo Gold is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  7.49  in Argo Gold on October 10, 2024 and sell it today you would lose (1.54) from holding Argo Gold or give up 20.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	86.09%
Values	Daily Returns

Zijin Mining Group  vs.  Argo 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. In spite of uncertain performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Argo Gold

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Argo Gold are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Argo Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zijin Mining and Argo Gold

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

The idea behind Zijin Mining Group and Argo 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.