Correlation Between Gold Road and Zijin Mining
Can any of the company-specific risk be diversified away by investing in both Gold Road 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 Gold Road and Zijin Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gold Road Resources and Zijin Mining Group, you can compare the effects of market volatilities on Gold Road 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 Gold Road with a short position of Zijin Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Road and Zijin Mining.
Diversification Opportunities for Gold Road and Zijin Mining
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Gold and Zijin is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Gold Road Resources 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 Gold Road 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 Gold Road Resources 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 Gold Road i.e., Gold Road and Zijin Mining go up and down completely randomly.
Pair Corralation between Gold Road and Zijin Mining
Assuming the 90 days horizon Gold Road Resources is expected to generate 0.82 times more return on investment than Zijin Mining. However, Gold Road Resources is 1.23 times less risky than Zijin Mining. It trades about 0.37 of its potential returns per unit of risk. Zijin Mining Group is currently generating about 0.12 per unit of risk. If you would invest 106.00 in Gold Road Resources on September 13, 2024 and sell it today you would earn a total of 24.00 from holding Gold Road Resources or generate 22.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Road Resources vs. Zijin Mining Group
Performance |
| Timeline |
| Gold Road Resources |
| Zijin Mining Group |
Gold Road and Zijin Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Road and Zijin Mining
The main advantage of trading using opposite Gold Road and Zijin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Road 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.| Gold Road vs. Franco Nevada | Gold Road vs. Superior Plus Corp | Gold Road vs. SIVERS SEMICONDUCTORS AB | Gold Road vs. Norsk Hydro ASA |
| Zijin Mining vs. BHP Group Limited | Zijin Mining vs. Vale SA | Zijin Mining vs. Superior Plus Corp | Zijin Mining vs. SIVERS SEMICONDUCTORS AB |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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