Correlation Between SHIN ETSU and Zijin Mining
Can any of the company-specific risk be diversified away by investing in both SHIN ETSU 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 SHIN ETSU and Zijin Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SHIN ETSU CHEMICAL and Zijin Mining Group, you can compare the effects of market volatilities on SHIN ETSU 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 SHIN ETSU with a short position of Zijin Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of SHIN ETSU and Zijin Mining.
Diversification Opportunities for SHIN ETSU and Zijin Mining
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SHIN and Zijin is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding SHIN ETSU CHEMICAL 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 SHIN ETSU 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 SHIN ETSU CHEMICAL 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 SHIN ETSU i.e., SHIN ETSU and Zijin Mining go up and down completely randomly.
Pair Corralation between SHIN ETSU and Zijin Mining
Assuming the 90 days trading horizon SHIN ETSU CHEMICAL is expected to under-perform the Zijin Mining. But the stock apears to be less risky and, when comparing its historical volatility, SHIN ETSU CHEMICAL is 1.52 times less risky than Zijin Mining. The stock trades about -0.22 of its potential returns per unit of risk. The Zijin Mining Group is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 176.00 in Zijin Mining Group on September 19, 2024 and sell it today you would lose (3.00) from holding Zijin Mining Group or give up 1.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SHIN ETSU CHEMICAL vs. Zijin Mining Group
Performance |
| Timeline |
| SHIN ETSU CHEMICAL |
| Zijin Mining Group |
SHIN ETSU and Zijin Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SHIN ETSU and Zijin Mining
The main advantage of trading using opposite SHIN ETSU and Zijin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SHIN ETSU 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.The idea behind SHIN ETSU CHEMICAL and Zijin Mining Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Zijin Mining vs. BHP Group Limited | Zijin Mining vs. Vale SA | Zijin Mining vs. Superior Plus Corp | Zijin Mining vs. SIVERS SEMICONDUCTORS AB |
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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