Correlation Between Zijin Mining and LG Electronics
Can any of the company-specific risk be diversified away by investing in both Zijin Mining and LG Electronics 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 LG Electronics 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 LG Electronics, you can compare the effects of market volatilities on Zijin Mining and LG Electronics 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 LG Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zijin Mining and LG Electronics.
Diversification Opportunities for Zijin Mining and LG Electronics
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Zijin and LGLG is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and LG Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Electronics 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 LG Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Electronics has no effect on the direction of Zijin Mining i.e., Zijin Mining and LG Electronics go up and down completely randomly.
Pair Corralation between Zijin Mining and LG Electronics
Assuming the 90 days horizon Zijin Mining Group is expected to generate 0.91 times more return on investment than LG Electronics. However, Zijin Mining Group is 1.1 times less risky than LG Electronics. It trades about 0.08 of its potential returns per unit of risk. LG Electronics is currently generating about -0.01 per unit of risk. If you would invest 173.00 in Zijin Mining Group on October 20, 2024 and sell it today you would earn a total of 7.00 from holding Zijin Mining Group or generate 4.05% 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. LG Electronics
Performance |
| Timeline |
| Zijin Mining Group |
| LG Electronics |
Zijin Mining and LG Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zijin Mining and LG Electronics
The main advantage of trading using opposite Zijin Mining and LG Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zijin Mining position performs unexpectedly, LG Electronics 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 LG Electronics will offset losses from the drop in LG Electronics' long position.| Zijin Mining vs. DAIRY FARM INTL | Zijin Mining vs. ecotel communication ag | Zijin Mining vs. Singapore Telecommunications Limited | Zijin Mining vs. Cairo Communication SpA |
| LG Electronics vs. Zijin Mining Group | LG Electronics vs. betterU Education Corp | LG Electronics vs. Calibre Mining Corp | LG Electronics vs. MAGNUM MINING EXP |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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