Correlation Between Zijin Mining and Indorama Ventures
Can any of the company-specific risk be diversified away by investing in both Zijin Mining and Indorama Ventures 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 Indorama Ventures 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 Indorama Ventures PCL, you can compare the effects of market volatilities on Zijin Mining and Indorama Ventures 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 Indorama Ventures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zijin Mining and Indorama Ventures.
Diversification Opportunities for Zijin Mining and Indorama Ventures
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Zijin and Indorama is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and Indorama Ventures PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indorama Ventures PCL 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 Indorama Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indorama Ventures PCL has no effect on the direction of Zijin Mining i.e., Zijin Mining and Indorama Ventures go up and down completely randomly.
Pair Corralation between Zijin Mining and Indorama Ventures
Assuming the 90 days horizon Zijin Mining Group is expected to under-perform the Indorama Ventures. But the stock apears to be less risky and, when comparing its historical volatility, Zijin Mining Group is 1.96 times less risky than Indorama Ventures. The stock trades about -0.09 of its potential returns per unit of risk. The Indorama Ventures PCL is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 51.00 in Indorama Ventures PCL on September 5, 2024 and sell it today you would earn a total of 16.00 from holding Indorama Ventures PCL or generate 31.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zijin Mining Group vs. Indorama Ventures PCL
Performance |
| Timeline |
| Zijin Mining Group |
| Indorama Ventures PCL |
Zijin Mining and Indorama Ventures Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zijin Mining and Indorama Ventures
The main advantage of trading using opposite Zijin Mining and Indorama Ventures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zijin Mining position performs unexpectedly, Indorama Ventures 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 Indorama Ventures will offset losses from the drop in Indorama Ventures' long position.The idea behind Zijin Mining Group and Indorama Ventures PCL pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Indorama Ventures vs. Zijin Mining Group | Indorama Ventures vs. Autohome ADR | Indorama Ventures vs. OURGAME INTHOLDL 00005 | Indorama Ventures vs. Beazer Homes USA |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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