Correlation Between Eastman Chemical and Zijin Mining
Can any of the company-specific risk be diversified away by investing in both Eastman Chemical 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 Eastman Chemical and Zijin Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastman Chemical and Zijin Mining Group, you can compare the effects of market volatilities on Eastman Chemical 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 Eastman Chemical with a short position of Zijin Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and Zijin Mining.
Diversification Opportunities for Eastman Chemical and Zijin Mining
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Eastman and Zijin is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical 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 Eastman Chemical 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 Eastman Chemical 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 Eastman Chemical i.e., Eastman Chemical and Zijin Mining go up and down completely randomly.
Pair Corralation between Eastman Chemical and Zijin Mining
Assuming the 90 days horizon Eastman Chemical is expected to generate 2.87 times less return on investment than Zijin Mining. But when comparing it to its historical volatility, Eastman Chemical is 2.17 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 0.06 of returns per unit of risk over similar time horizon. If you would invest 84.00 in Zijin Mining Group on September 19, 2024 and sell it today you would earn a total of 87.00 from holding Zijin Mining Group or generate 103.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastman Chemical vs. Zijin Mining Group
Performance |
| Timeline |
| Eastman Chemical |
| Zijin Mining Group |
Eastman Chemical and Zijin Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Chemical and Zijin Mining
The main advantage of trading using opposite Eastman Chemical and Zijin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical 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.| Eastman Chemical vs. BLUESCOPE STEEL | Eastman Chemical vs. KRAKATAU STEEL B | Eastman Chemical vs. Carsales | Eastman Chemical vs. NIPPON STEEL SPADR |
| 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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