Correlation Between Tongyu Communication and Zijin Mining
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By analyzing existing cross correlation between Tongyu Communication and Zijin Mining Group, you can compare the effects of market volatilities on Tongyu Communication and Zijin 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 Tongyu Communication with a short position of Zijin Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tongyu Communication and Zijin Mining.
Diversification Opportunities for Tongyu Communication and Zijin Mining
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Tongyu and Zijin is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Tongyu Communication and Zijin Mining Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zijin Mining Group and Tongyu Communication 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 Tongyu Communication are associated (or correlated) with Zijin Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zijin Mining Group has no effect on the direction of Tongyu Communication i.e., Tongyu Communication and Zijin Mining go up and down completely randomly.
Pair Corralation between Tongyu Communication and Zijin Mining
Assuming the 90 days trading horizon Tongyu Communication is expected to generate 1.77 times more return on investment than Zijin Mining. However, Tongyu Communication is 1.77 times more volatile than Zijin Mining Group. It trades about 0.03 of its potential returns per unit of risk. Zijin Mining Group is currently generating about 0.05 per unit of risk. If you would invest 1,511 in Tongyu Communication on August 25, 2024 and sell it today you would earn a total of 254.00 from holding Tongyu Communication or generate 16.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tongyu Communication vs. Zijin Mining Group
Performance |
| Timeline |
| Tongyu Communication |
| Zijin Mining Group |
Tongyu Communication and Zijin Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tongyu Communication and Zijin Mining
The main advantage of trading using opposite Tongyu Communication and Zijin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tongyu Communication position performs unexpectedly, Zijin 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 Zijin Mining will offset losses from the drop in Zijin Mining's long position.The idea behind Tongyu Communication and Zijin Mining Group 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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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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