Correlation Between Zijin Mining and Bank of China
Can any of the company-specific risk be diversified away by investing in both Zijin Mining and Bank of 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 Bank of 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 Bank of China, you can compare the effects of market volatilities on Zijin Mining and Bank of 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 Bank of China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zijin Mining and Bank of China.
Diversification Opportunities for Zijin Mining and Bank of China
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Zijin and Bank is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and Bank of China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of China 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 Bank of China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of China has no effect on the direction of Zijin Mining i.e., Zijin Mining and Bank of China go up and down completely randomly.
Pair Corralation between Zijin Mining and Bank of China
Assuming the 90 days horizon Zijin Mining Group is expected to under-perform the Bank of China. But the pink sheet apears to be less risky and, when comparing its historical volatility, Zijin Mining Group is 1.13 times less risky than Bank of China. The pink sheet trades about -0.11 of its potential returns per unit of risk. The Bank of China is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 49.00 in Bank of China on October 12, 2024 and sell it today you would earn a total of 1.00 from holding Bank of China or generate 2.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zijin Mining Group vs. Bank of China
Performance |
| Timeline |
| Zijin Mining Group |
| Bank of China |
Zijin Mining and Bank of China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zijin Mining and Bank of China
The main advantage of trading using opposite Zijin Mining and Bank of China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zijin Mining position performs unexpectedly, Bank of 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 Bank of China will offset losses from the drop in Bank of 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 |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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