Correlation Between American Eagle and Zijin Mining
Can any of the company-specific risk be diversified away by investing in both American Eagle 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 American Eagle and Zijin Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Eagle Outfitters and Zijin Mining Group, you can compare the effects of market volatilities on American Eagle 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 American Eagle with a short position of Zijin Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Eagle and Zijin Mining.
Diversification Opportunities for American Eagle and Zijin Mining
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Zijin is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters 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 American Eagle 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 American Eagle Outfitters 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 American Eagle i.e., American Eagle and Zijin Mining go up and down completely randomly.
Pair Corralation between American Eagle and Zijin Mining
Assuming the 90 days trading horizon American Eagle is expected to generate 2.72 times less return on investment than Zijin Mining. But when comparing it to its historical volatility, American Eagle Outfitters is 1.18 times less risky than Zijin Mining. It trades about 0.03 of its potential returns per unit of risk. Zijin Mining Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 87.00 in Zijin Mining Group on August 26, 2024 and sell it today you would earn a total of 96.00 from holding Zijin Mining Group or generate 110.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Eagle Outfitters vs. Zijin Mining Group
Performance |
| Timeline |
| American Eagle Outfitters |
| Zijin Mining Group |
American Eagle and Zijin Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Eagle and Zijin Mining
The main advantage of trading using opposite American Eagle and Zijin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Eagle 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.| American Eagle vs. Apple Inc | American Eagle vs. Apple Inc | American Eagle vs. Apple Inc | American Eagle vs. Apple Inc |
| Zijin Mining vs. BHP Group Limited | Zijin Mining vs. Superior Plus Corp | Zijin Mining vs. NMI Holdings | Zijin Mining vs. Origin Agritech |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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