Correlation Between Western Digital and Zijin Mining
Can any of the company-specific risk be diversified away by investing in both Western Digital 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 Western Digital and Zijin Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Digital and Zijin Mining Group, you can compare the effects of market volatilities on Western Digital 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 Western Digital with a short position of Zijin Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Digital and Zijin Mining.
Diversification Opportunities for Western Digital and Zijin Mining
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Western and Zijin is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Western Digital 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 Western Digital 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 Western Digital 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 Western Digital i.e., Western Digital and Zijin Mining go up and down completely randomly.
Pair Corralation between Western Digital and Zijin Mining
Considering the 90-day investment horizon Western Digital is expected to generate 3.31 times less return on investment than Zijin Mining. But when comparing it to its historical volatility, Western Digital is 3.78 times less risky than Zijin Mining. It trades about 0.07 of its potential returns per unit of risk. Zijin Mining Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 90.00 in Zijin Mining Group on September 3, 2024 and sell it today you would earn a total of 101.00 from holding Zijin Mining Group or generate 112.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.71% |
| Values | Daily Returns |
Western Digital vs. Zijin Mining Group
Performance |
| Timeline |
| Western Digital |
| Zijin Mining Group |
Western Digital and Zijin Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Digital and Zijin Mining
The main advantage of trading using opposite Western Digital and Zijin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Digital 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.| Western Digital vs. NetApp Inc | Western Digital vs. Logitech International SA | Western Digital vs. HP Inc | Western Digital vs. Dell Technologies |
| Zijin Mining vs. Harmony Gold Mining | Zijin Mining vs. SPACE | Zijin Mining vs. T Rowe Price | Zijin Mining vs. Ampleforth |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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