Correlation Between Zijin Mining and ZTE
Can any of the company-specific risk be diversified away by investing in both Zijin Mining and ZTE 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 ZTE 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 ZTE Corporation, you can compare the effects of market volatilities on Zijin Mining and ZTE 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 ZTE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zijin Mining and ZTE.
Diversification Opportunities for Zijin Mining and ZTE
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Zijin and ZTE is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and ZTE Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZTE Corporation 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 ZTE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZTE Corporation has no effect on the direction of Zijin Mining i.e., Zijin Mining and ZTE go up and down completely randomly.
Pair Corralation between Zijin Mining and ZTE
Assuming the 90 days horizon Zijin Mining is expected to generate 1.39 times less return on investment than ZTE. But when comparing it to its historical volatility, Zijin Mining Group is 1.36 times less risky than ZTE. It trades about 0.07 of its potential returns per unit of risk. ZTE Corporation is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 124.00 in ZTE Corporation on September 12, 2024 and sell it today you would earn a total of 106.00 from holding ZTE Corporation or generate 85.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zijin Mining Group vs. ZTE Corp.
Performance |
| Timeline |
| Zijin Mining Group |
| ZTE Corporation |
Zijin Mining and ZTE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zijin Mining and ZTE
The main advantage of trading using opposite Zijin Mining and ZTE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zijin Mining position performs unexpectedly, ZTE 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 ZTE will offset losses from the drop in ZTE'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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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