Correlation Between Zijin Mining and Major Drilling
Can any of the company-specific risk be diversified away by investing in both Zijin Mining and Major Drilling 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 Major Drilling 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 Major Drilling Group, you can compare the effects of market volatilities on Zijin Mining and Major Drilling 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 Major Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zijin Mining and Major Drilling.
Diversification Opportunities for Zijin Mining and Major Drilling
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Zijin and Major is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and Major Drilling Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Major Drilling Group 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 Major Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Major Drilling Group has no effect on the direction of Zijin Mining i.e., Zijin Mining and Major Drilling go up and down completely randomly.
Pair Corralation between Zijin Mining and Major Drilling
Assuming the 90 days horizon Zijin Mining Group is expected to generate 1.37 times more return on investment than Major Drilling. However, Zijin Mining is 1.37 times more volatile than Major Drilling Group. It trades about 0.07 of its potential returns per unit of risk. Major Drilling Group is currently generating about 0.04 per unit of risk. If you would invest 115.00 in Zijin Mining Group on August 26, 2024 and sell it today you would earn a total of 66.00 from holding Zijin Mining Group or generate 57.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zijin Mining Group vs. Major Drilling Group
Performance |
| Timeline |
| Zijin Mining Group |
| Major Drilling Group |
Zijin Mining and Major Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zijin Mining and Major Drilling
The main advantage of trading using opposite Zijin Mining and Major Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zijin Mining position performs unexpectedly, Major Drilling 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 Major Drilling will offset losses from the drop in Major Drilling's long position.| Zijin Mining vs. MINCO SILVER | Zijin Mining vs. CENTURIA OFFICE REIT | Zijin Mining vs. Corporate Office Properties | Zijin Mining vs. MCEWEN MINING INC |
| Major Drilling vs. BHP Group Limited | Major Drilling vs. Superior Plus Corp | Major Drilling vs. NMI Holdings | Major Drilling 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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