Correlation Between Major Drilling and Zijin Mining
Can any of the company-specific risk be diversified away by investing in both Major Drilling and Zijin 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 Major Drilling and Zijin Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Major Drilling Group and Zijin Mining Group, you can compare the effects of market volatilities on Major Drilling 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 Major Drilling with a short position of Zijin Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Major Drilling and Zijin Mining.
Diversification Opportunities for Major Drilling and Zijin Mining
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Major and Zijin is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Major Drilling Group 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 Major Drilling 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 Major Drilling Group 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 Major Drilling i.e., Major Drilling and Zijin Mining go up and down completely randomly.
Pair Corralation between Major Drilling and Zijin Mining
Assuming the 90 days horizon Major Drilling is expected to generate 2.66 times less return on investment than Zijin Mining. But when comparing it to its historical volatility, Major Drilling Group is 1.37 times less risky than Zijin Mining. It trades about 0.04 of its potential returns per unit of risk. Zijin Mining Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 115.00 in Zijin Mining Group on August 26, 2024 and sell it today you would earn a total of 66.00 from holding Zijin Mining Group or generate 57.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Major Drilling Group vs. Zijin Mining Group
Performance |
| Timeline |
| Major Drilling Group |
| Zijin Mining Group |
Major Drilling and Zijin Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Major Drilling and Zijin Mining
The main advantage of trading using opposite Major Drilling and Zijin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Major Drilling 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.| Major Drilling vs. BHP Group Limited | Major Drilling vs. Superior Plus Corp | Major Drilling vs. NMI Holdings | Major Drilling vs. Origin Agritech |
| Zijin Mining vs. MINCO SILVER | Zijin Mining vs. CENTURIA OFFICE REIT | Zijin Mining vs. Corporate Office Properties | Zijin Mining vs. MCEWEN MINING INC |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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