Correlation Between Zijin Mining and Eni SpA
Can any of the company-specific risk be diversified away by investing in both Zijin Mining and Eni SpA 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 Eni SpA 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 Eni SpA, you can compare the effects of market volatilities on Zijin Mining and Eni SpA 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 Eni SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zijin Mining and Eni SpA.
Diversification Opportunities for Zijin Mining and Eni SpA
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Zijin and Eni is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and Eni SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eni SpA 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 Eni SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eni SpA has no effect on the direction of Zijin Mining i.e., Zijin Mining and Eni SpA go up and down completely randomly.
Pair Corralation between Zijin Mining and Eni SpA
Assuming the 90 days horizon Zijin Mining Group is expected to generate 3.56 times more return on investment than Eni SpA. However, Zijin Mining is 3.56 times more volatile than Eni SpA. It trades about 0.02 of its potential returns per unit of risk. Eni SpA is currently generating about -0.13 per unit of risk. If you would invest 185.00 in Zijin Mining Group on September 12, 2024 and sell it today you would earn a total of 1.00 from holding Zijin Mining Group or generate 0.54% 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. Eni SpA
Performance |
| Timeline |
| Zijin Mining Group |
| Eni SpA |
Zijin Mining and Eni SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zijin Mining and Eni SpA
The main advantage of trading using opposite Zijin Mining and Eni SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zijin Mining position performs unexpectedly, Eni SpA 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 Eni SpA will offset losses from the drop in Eni SpA'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 |
| Eni SpA vs. Zijin Mining Group | Eni SpA vs. GRIFFIN MINING LTD | Eni SpA vs. Microchip Technology Incorporated | Eni SpA vs. Amkor Technology |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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