Correlation Between Zijin Mining and American Airlines
Can any of the company-specific risk be diversified away by investing in both Zijin Mining and American Airlines 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 American Airlines 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 American Airlines Group, you can compare the effects of market volatilities on Zijin Mining and American Airlines 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 American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zijin Mining and American Airlines.
Diversification Opportunities for Zijin Mining and American Airlines
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Zijin and American is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines 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 American Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Airlines has no effect on the direction of Zijin Mining i.e., Zijin Mining and American Airlines go up and down completely randomly.
Pair Corralation between Zijin Mining and American Airlines
Assuming the 90 days horizon Zijin Mining Group is expected to generate 1.33 times more return on investment than American Airlines. However, Zijin Mining is 1.33 times more volatile than American Airlines Group. It trades about 0.06 of its potential returns per unit of risk. American Airlines Group is currently generating about 0.01 per unit of risk. If you would invest 109.00 in Zijin Mining Group on August 31, 2024 and sell it today you would earn a total of 68.00 from holding Zijin Mining Group or generate 62.39% 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. American Airlines Group
Performance |
| Timeline |
| Zijin Mining Group |
| American Airlines |
Zijin Mining and American Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zijin Mining and American Airlines
The main advantage of trading using opposite Zijin Mining and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zijin Mining position performs unexpectedly, American Airlines 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 American Airlines will offset losses from the drop in American Airlines' long position.| Zijin Mining vs. BHP Group Limited | Zijin Mining vs. Rio Tinto Group | Zijin Mining vs. Rio Tinto Group | Zijin Mining vs. Vale SA |
| American Airlines vs. Southwest Airlines Co | American Airlines vs. Superior Plus Corp | American Airlines vs. NMI Holdings | American Airlines 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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