Correlation Between Zijin Mining and AerCap Holdings

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Can any of the company-specific risk be diversified away by investing in both Zijin Mining and AerCap Holdings 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 Zijin Mining and AerCap Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zijin Mining Group and AerCap Holdings NV, you can compare the effects of market volatilities on Zijin Mining and AerCap Holdings 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 Zijin Mining with a short position of AerCap Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zijin Mining and AerCap Holdings.

Diversification Opportunities for Zijin Mining and AerCap Holdings

0.14
  Correlation Coefficient

Average diversification

The 3 months correlation between Zijin and AerCap is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and AerCap Holdings NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AerCap Holdings NV and Zijin Mining 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 Zijin Mining Group are associated (or correlated) with AerCap Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AerCap Holdings NV has no effect on the direction of Zijin Mining i.e., Zijin Mining and AerCap Holdings go up and down completely randomly.

Pair Corralation between Zijin Mining and AerCap Holdings

Assuming the 90 days horizon Zijin Mining Group is expected to generate 6.07 times more return on investment than AerCap Holdings. However, Zijin Mining is 6.07 times more volatile than AerCap Holdings NV. It trades about 0.05 of its potential returns per unit of risk. AerCap Holdings NV is currently generating about 0.07 per unit of risk. If you would invest  139.00  in Zijin Mining Group on August 27, 2024 and sell it today you would earn a total of  54.00  from holding Zijin Mining Group or generate 38.85% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy90.73%
ValuesDaily Returns

Zijin Mining Group  vs.  AerCap Holdings NV

 Performance 
       Timeline  
Zijin Mining Group 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Zijin Mining Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Zijin Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
AerCap Holdings NV 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in AerCap Holdings NV are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, AerCap Holdings is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Zijin Mining and AerCap Holdings Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Zijin Mining and AerCap Holdings

The main advantage of trading using opposite Zijin Mining and AerCap Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zijin Mining position performs unexpectedly, AerCap Holdings 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 AerCap Holdings will offset losses from the drop in AerCap Holdings' long position.
The idea behind Zijin Mining Group and AerCap Holdings NV 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.
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

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