Correlation Between Zijin Mining and LB Foster
Can any of the company-specific risk be diversified away by investing in both Zijin Mining and LB Foster 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 LB Foster 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 LB Foster, you can compare the effects of market volatilities on Zijin Mining and LB Foster 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 LB Foster. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zijin Mining and LB Foster.
Diversification Opportunities for Zijin Mining and LB Foster
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Zijin and FSTR is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and LB Foster in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LB Foster 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 LB Foster. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LB Foster has no effect on the direction of Zijin Mining i.e., Zijin Mining and LB Foster go up and down completely randomly.
Pair Corralation between Zijin Mining and LB Foster
Assuming the 90 days horizon Zijin Mining Group is expected to under-perform the LB Foster. But the pink sheet apears to be less risky and, when comparing its historical volatility, Zijin Mining Group is 1.16 times less risky than LB Foster. The pink sheet trades about -0.15 of its potential returns per unit of risk. The LB Foster is currently generating about 0.53 of returns per unit of risk over similar time horizon. If you would invest 1,911 in LB Foster on September 3, 2024 and sell it today you would earn a total of 1,009 from holding LB Foster or generate 52.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zijin Mining Group vs. LB Foster
Performance |
| Timeline |
| Zijin Mining Group |
| LB Foster |
Zijin Mining and LB Foster Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zijin Mining and LB Foster
The main advantage of trading using opposite Zijin Mining and LB Foster positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zijin Mining position performs unexpectedly, LB Foster 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 LB Foster will offset losses from the drop in LB Foster's long position.| Zijin Mining vs. Harmony Gold Mining | Zijin Mining vs. SPACE | Zijin Mining vs. T Rowe Price | Zijin Mining vs. Ampleforth |
| LB Foster vs. Trinity Industries | LB Foster vs. Freightcar America | LB Foster vs. Westinghouse Air Brake | LB Foster vs. Norfolk Southern |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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