Correlation Between Major Drilling and ZIJIN MINH
Can any of the company-specific risk be diversified away by investing in both Major Drilling and ZIJIN MINH 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 MINH 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 MINH UNSPADR20, you can compare the effects of market volatilities on Major Drilling and ZIJIN MINH 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 MINH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Major Drilling and ZIJIN MINH.
Diversification Opportunities for Major Drilling and ZIJIN MINH
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Major and ZIJIN is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Major Drilling Group and ZIJIN MINH UNSPADR20 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZIJIN MINH UNSPADR20 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 MINH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZIJIN MINH UNSPADR20 has no effect on the direction of Major Drilling i.e., Major Drilling and ZIJIN MINH go up and down completely randomly.
Pair Corralation between Major Drilling and ZIJIN MINH
Assuming the 90 days horizon Major Drilling is expected to generate 2.63 times less return on investment than ZIJIN MINH. But when comparing it to its historical volatility, Major Drilling Group is 1.34 times less risky than ZIJIN MINH. It trades about 0.06 of its potential returns per unit of risk. ZIJIN MINH UNSPADR20 is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3,680 in ZIJIN MINH UNSPADR20 on September 1, 2024 and sell it today you would earn a total of 280.00 from holding ZIJIN MINH UNSPADR20 or generate 7.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Major Drilling Group vs. ZIJIN MINH UNSPADR20
Performance |
| Timeline |
| Major Drilling Group |
| ZIJIN MINH UNSPADR20 |
Major Drilling and ZIJIN MINH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Major Drilling and ZIJIN MINH
The main advantage of trading using opposite Major Drilling and ZIJIN MINH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Major Drilling position performs unexpectedly, ZIJIN MINH 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 MINH will offset losses from the drop in ZIJIN MINH's long position.| Major Drilling vs. BHP Group Limited | Major Drilling vs. Rio Tinto Group | Major Drilling vs. Rio Tinto Group | Major Drilling vs. Vale SA |
| ZIJIN MINH vs. AWILCO DRILLING PLC | ZIJIN MINH vs. DICKS Sporting Goods | ZIJIN MINH vs. PRECISION DRILLING P | ZIJIN MINH vs. Major Drilling Group |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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