Correlation Between Sims Metal and Zijin Mining
Can any of the company-specific risk be diversified away by investing in both Sims Metal and Zijin Mining 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 Sims Metal and Zijin Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sims Metal Management and Zijin Mining Group, you can compare the effects of market volatilities on Sims Metal and Zijin Mining 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 Sims Metal with a short position of Zijin Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sims Metal and Zijin Mining.
Diversification Opportunities for Sims Metal and Zijin Mining
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sims and Zijin is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Sims Metal Management and Zijin Mining Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zijin Mining Group and Sims Metal 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 Sims Metal Management are associated (or correlated) with Zijin Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zijin Mining Group has no effect on the direction of Sims Metal i.e., Sims Metal and Zijin Mining go up and down completely randomly.
Pair Corralation between Sims Metal and Zijin Mining
Assuming the 90 days horizon Sims Metal Management is expected to generate 0.66 times more return on investment than Zijin Mining. However, Sims Metal Management is 1.53 times less risky than Zijin Mining. It trades about 0.1 of its potential returns per unit of risk. Zijin Mining Group is currently generating about -0.09 per unit of risk. If you would invest 765.00 in Sims Metal Management on September 3, 2024 and sell it today you would earn a total of 35.00 from holding Sims Metal Management or generate 4.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sims Metal Management vs. Zijin Mining Group
Performance |
| Timeline |
| Sims Metal Management |
| Zijin Mining Group |
Sims Metal and Zijin Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sims Metal and Zijin Mining
The main advantage of trading using opposite Sims Metal and Zijin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sims Metal position performs unexpectedly, Zijin Mining 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 Zijin Mining will offset losses from the drop in Zijin Mining's long position.| Sims Metal vs. ArcelorMittal | Sims Metal vs. Steel Dynamics | Sims Metal vs. NIPPON STEEL SPADR | Sims Metal vs. POSCO Holdings |
| Zijin Mining vs. ARISTOCRAT LEISURE | Zijin Mining vs. EAT WELL INVESTMENT | Zijin Mining vs. ePlay Digital | Zijin Mining vs. PennantPark Investment |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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