Correlation Between Zijin Mining and GEAR4MUSIC
Can any of the company-specific risk be diversified away by investing in both Zijin Mining and GEAR4MUSIC 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 GEAR4MUSIC 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 GEAR4MUSIC LS 10, you can compare the effects of market volatilities on Zijin Mining and GEAR4MUSIC 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 GEAR4MUSIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zijin Mining and GEAR4MUSIC.
Diversification Opportunities for Zijin Mining and GEAR4MUSIC
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Zijin and GEAR4MUSIC is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and GEAR4MUSIC LS 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEAR4MUSIC LS 10 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 GEAR4MUSIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEAR4MUSIC LS 10 has no effect on the direction of Zijin Mining i.e., Zijin Mining and GEAR4MUSIC go up and down completely randomly.
Pair Corralation between Zijin Mining and GEAR4MUSIC
Assuming the 90 days horizon Zijin Mining is expected to generate 2.8 times less return on investment than GEAR4MUSIC. In addition to that, Zijin Mining is 1.24 times more volatile than GEAR4MUSIC LS 10. It trades about 0.02 of its total potential returns per unit of risk. GEAR4MUSIC LS 10 is currently generating about 0.06 per unit of volatility. If you would invest 154.00 in GEAR4MUSIC LS 10 on August 29, 2024 and sell it today you would earn a total of 30.00 from holding GEAR4MUSIC LS 10 or generate 19.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zijin Mining Group vs. GEAR4MUSIC LS 10
Performance |
| Timeline |
| Zijin Mining Group |
| GEAR4MUSIC LS 10 |
Zijin Mining and GEAR4MUSIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zijin Mining and GEAR4MUSIC
The main advantage of trading using opposite Zijin Mining and GEAR4MUSIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zijin Mining position performs unexpectedly, GEAR4MUSIC 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 GEAR4MUSIC will offset losses from the drop in GEAR4MUSIC's long position.| Zijin Mining vs. BHP Group Limited | Zijin Mining vs. BHP Group Limited | Zijin Mining vs. Rio Tinto Group | Zijin Mining vs. Vale SA |
| GEAR4MUSIC vs. Amazon Inc | GEAR4MUSIC vs. Amazon Inc | GEAR4MUSIC vs. Alibaba Group Holdings | GEAR4MUSIC vs. JD Inc Adr |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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