Correlation Between Zijin Mining and Lion Biotechnologies
Can any of the company-specific risk be diversified away by investing in both Zijin Mining and Lion Biotechnologies 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 Lion Biotechnologies 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 Lion Biotechnologies, you can compare the effects of market volatilities on Zijin Mining and Lion Biotechnologies 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 Lion Biotechnologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zijin Mining and Lion Biotechnologies.
Diversification Opportunities for Zijin Mining and Lion Biotechnologies
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Zijin and Lion is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and Lion Biotechnologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Biotechnologies 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 Lion Biotechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Biotechnologies has no effect on the direction of Zijin Mining i.e., Zijin Mining and Lion Biotechnologies go up and down completely randomly.
Pair Corralation between Zijin Mining and Lion Biotechnologies
Assuming the 90 days horizon Zijin Mining Group is expected to generate 0.68 times more return on investment than Lion Biotechnologies. However, Zijin Mining Group is 1.48 times less risky than Lion Biotechnologies. It trades about -0.07 of its potential returns per unit of risk. Lion Biotechnologies is currently generating about -0.08 per unit of risk. If you would invest 192.00 in Zijin Mining Group on August 31, 2024 and sell it today you would lose (12.00) from holding Zijin Mining Group or give up 6.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zijin Mining Group vs. Lion Biotechnologies
Performance |
| Timeline |
| Zijin Mining Group |
| Lion Biotechnologies |
Zijin Mining and Lion Biotechnologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zijin Mining and Lion Biotechnologies
The main advantage of trading using opposite Zijin Mining and Lion Biotechnologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zijin Mining position performs unexpectedly, Lion Biotechnologies 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 Lion Biotechnologies will offset losses from the drop in Lion Biotechnologies' long position.| Zijin Mining vs. BHP Group Limited | Zijin Mining vs. BHP Group Limited | Zijin Mining vs. Rio Tinto Group | Zijin Mining vs. Rio Tinto Group |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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