Correlation Between CHAMPION IRON and Zijin Mining
Can any of the company-specific risk be diversified away by investing in both CHAMPION IRON 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 CHAMPION IRON and Zijin Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHAMPION IRON and Zijin Mining Group, you can compare the effects of market volatilities on CHAMPION IRON 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 CHAMPION IRON with a short position of Zijin Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHAMPION IRON and Zijin Mining.
Diversification Opportunities for CHAMPION IRON and Zijin Mining
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between CHAMPION and Zijin is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding CHAMPION IRON 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 CHAMPION IRON 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 CHAMPION IRON 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 CHAMPION IRON i.e., CHAMPION IRON and Zijin Mining go up and down completely randomly.
Pair Corralation between CHAMPION IRON and Zijin Mining
Assuming the 90 days trading horizon CHAMPION IRON is expected to under-perform the Zijin Mining. In addition to that, CHAMPION IRON is 1.08 times more volatile than Zijin Mining Group. It trades about -0.12 of its total potential returns per unit of risk. Zijin Mining Group is currently generating about 0.15 per unit of volatility. If you would invest 171.00 in Zijin Mining Group on November 3, 2024 and sell it today you would earn a total of 13.00 from holding Zijin Mining Group or generate 7.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHAMPION IRON vs. Zijin Mining Group
Performance |
| Timeline |
| CHAMPION IRON |
| Zijin Mining Group |
CHAMPION IRON and Zijin Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHAMPION IRON and Zijin Mining
The main advantage of trading using opposite CHAMPION IRON and Zijin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHAMPION IRON 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.| CHAMPION IRON vs. Rio Tinto Group | CHAMPION IRON vs. Vale SA | CHAMPION IRON vs. Vale SA | CHAMPION IRON vs. Glencore PLC |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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