Correlation Between Zijin Mining and Air China
Can any of the company-specific risk be diversified away by investing in both Zijin Mining and Air China 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 Air China 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 Air China Limited, you can compare the effects of market volatilities on Zijin Mining and Air China 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 Air China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zijin Mining and Air China.
Diversification Opportunities for Zijin Mining and Air China
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Zijin and Air is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and Air China Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air China Limited 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 Air China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air China Limited has no effect on the direction of Zijin Mining i.e., Zijin Mining and Air China go up and down completely randomly.
Pair Corralation between Zijin Mining and Air China
Assuming the 90 days horizon Zijin Mining Group is expected to generate 2.23 times more return on investment than Air China. However, Zijin Mining is 2.23 times more volatile than Air China Limited. It trades about -0.11 of its potential returns per unit of risk. Air China Limited is currently generating about -0.32 per unit of risk. If you would invest 200.00 in Zijin Mining Group on October 12, 2024 and sell it today you would lose (14.00) from holding Zijin Mining Group or give up 7.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zijin Mining Group vs. Air China Limited
Performance |
| Timeline |
| Zijin Mining Group |
| Air China Limited |
Zijin Mining and Air China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zijin Mining and Air China
The main advantage of trading using opposite Zijin Mining and Air China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zijin Mining position performs unexpectedly, Air China 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 Air China will offset losses from the drop in Air China's long position.| Zijin Mining vs. Torex Gold Resources | Zijin Mining vs. Wesdome Gold Mines | Zijin Mining vs. Northern Star Resources | Zijin Mining vs. Regis Resources |
| Air China vs. Cebu Air | Air China vs. Finnair Oyj | Air China vs. easyJet plc | Air China vs. Norse Atlantic ASA |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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