Correlation Between ANGLO AMERICAN and Zijin Mining
Can any of the company-specific risk be diversified away by investing in both ANGLO AMERICAN 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 ANGLO AMERICAN and Zijin Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ANGLO AMERICAN SPADR and Zijin Mining Group, you can compare the effects of market volatilities on ANGLO AMERICAN 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 ANGLO AMERICAN with a short position of Zijin Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of ANGLO AMERICAN and Zijin Mining.
Diversification Opportunities for ANGLO AMERICAN and Zijin Mining
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ANGLO and Zijin is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding ANGLO AMERICAN SPADR 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 ANGLO AMERICAN 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 ANGLO AMERICAN SPADR 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 ANGLO AMERICAN i.e., ANGLO AMERICAN and Zijin Mining go up and down completely randomly.
Pair Corralation between ANGLO AMERICAN and Zijin Mining
Assuming the 90 days trading horizon ANGLO AMERICAN is expected to generate 2.84 times less return on investment than Zijin Mining. In addition to that, ANGLO AMERICAN is 1.02 times more volatile than Zijin Mining Group. It trades about 0.02 of its total potential returns per unit of risk. Zijin Mining Group is currently generating about 0.06 per unit of volatility. If you would invest 109.00 in Zijin Mining Group on August 31, 2024 and sell it today you would earn a total of 68.00 from holding Zijin Mining Group or generate 62.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.74% |
| Values | Daily Returns |
ANGLO AMERICAN SPADR vs. Zijin Mining Group
Performance |
| Timeline |
| ANGLO AMERICAN SPADR |
| Zijin Mining Group |
ANGLO AMERICAN and Zijin Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ANGLO AMERICAN and Zijin Mining
The main advantage of trading using opposite ANGLO AMERICAN and Zijin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ANGLO AMERICAN 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.| ANGLO AMERICAN vs. LION ONE METALS | ANGLO AMERICAN vs. GRIFFIN MINING LTD | ANGLO AMERICAN vs. Lion One Metals | ANGLO AMERICAN vs. Tianjin Capital Environmental |
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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