Correlation Between Zijin Mining and JD
Can any of the company-specific risk be diversified away by investing in both Zijin Mining and JD 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 Zijin Mining and JD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zijin Mining Group and JD Inc, you can compare the effects of market volatilities on Zijin Mining and JD 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 Zijin Mining with a short position of JD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zijin Mining and JD.
Diversification Opportunities for Zijin Mining and JD
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Zijin and JD is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and JD Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Inc and Zijin Mining 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 Zijin Mining Group are associated (or correlated) with JD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Inc has no effect on the direction of Zijin Mining i.e., Zijin Mining and JD go up and down completely randomly.
Pair Corralation between Zijin Mining and JD
Assuming the 90 days horizon Zijin Mining is expected to generate 1.15 times less return on investment than JD. But when comparing it to its historical volatility, Zijin Mining Group is 1.05 times less risky than JD. It trades about 0.12 of its potential returns per unit of risk. JD Inc is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,715 in JD Inc on September 13, 2024 and sell it today you would earn a total of 152.00 from holding JD Inc or generate 8.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zijin Mining Group vs. JD Inc
Performance |
| Timeline |
| Zijin Mining Group |
| JD Inc |
Zijin Mining and JD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zijin Mining and JD
The main advantage of trading using opposite Zijin Mining and JD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zijin Mining position performs unexpectedly, JD 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 JD will offset losses from the drop in JD's long position.| 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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