Correlation Between Zijin Mining and LPKF Laser
Can any of the company-specific risk be diversified away by investing in both Zijin Mining and LPKF Laser 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 LPKF Laser 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 LPKF Laser Electronics, you can compare the effects of market volatilities on Zijin Mining and LPKF Laser 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 LPKF Laser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zijin Mining and LPKF Laser.
Diversification Opportunities for Zijin Mining and LPKF Laser
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Zijin and LPKF is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and LPKF Laser Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LPKF Laser 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 LPKF Laser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LPKF Laser Electronics has no effect on the direction of Zijin Mining i.e., Zijin Mining and LPKF Laser go up and down completely randomly.
Pair Corralation between Zijin Mining and LPKF Laser
Assuming the 90 days horizon Zijin Mining is expected to generate 1.54 times less return on investment than LPKF Laser. In addition to that, Zijin Mining is 1.81 times more volatile than LPKF Laser Electronics. It trades about 0.01 of its total potential returns per unit of risk. LPKF Laser Electronics is currently generating about 0.03 per unit of volatility. If you would invest 810.00 in LPKF Laser Electronics on August 31, 2024 and sell it today you would earn a total of 50.00 from holding LPKF Laser Electronics or generate 6.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.23% |
| Values | Daily Returns |
Zijin Mining Group vs. LPKF Laser Electronics
Performance |
| Timeline |
| Zijin Mining Group |
| LPKF Laser Electronics |
Zijin Mining and LPKF Laser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zijin Mining and LPKF Laser
The main advantage of trading using opposite Zijin Mining and LPKF Laser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zijin Mining position performs unexpectedly, LPKF Laser 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 LPKF Laser will offset losses from the drop in LPKF Laser's long position.| Zijin Mining vs. BHP Group Limited | Zijin Mining vs. Rio Tinto Group | Zijin Mining vs. Rio Tinto Group | Zijin Mining vs. Vale SA |
| LPKF Laser vs. ABB | LPKF Laser vs. Emerson Electric Co | LPKF Laser vs. Superior Plus Corp | LPKF Laser vs. NMI Holdings |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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