Correlation Between Zijin Mining and ServiceNow
Can any of the company-specific risk be diversified away by investing in both Zijin Mining and ServiceNow 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 ServiceNow 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 ServiceNow, you can compare the effects of market volatilities on Zijin Mining and ServiceNow 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 ServiceNow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zijin Mining and ServiceNow.
Diversification Opportunities for Zijin Mining and ServiceNow
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Zijin and ServiceNow is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and ServiceNow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ServiceNow 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 ServiceNow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ServiceNow has no effect on the direction of Zijin Mining i.e., Zijin Mining and ServiceNow go up and down completely randomly.
Pair Corralation between Zijin Mining and ServiceNow
Assuming the 90 days horizon Zijin Mining Group is expected to generate 4.5 times more return on investment than ServiceNow. However, Zijin Mining is 4.5 times more volatile than ServiceNow. It trades about 0.06 of its potential returns per unit of risk. ServiceNow is currently generating about 0.1 per unit of risk. 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 Against |
| Strength | Insignificant |
| Accuracy | 90.71% |
| Values | Daily Returns |
Zijin Mining Group vs. ServiceNow
Performance |
| Timeline |
| Zijin Mining Group |
| ServiceNow |
Zijin Mining and ServiceNow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zijin Mining and ServiceNow
The main advantage of trading using opposite Zijin Mining and ServiceNow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zijin Mining position performs unexpectedly, ServiceNow 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 ServiceNow will offset losses from the drop in ServiceNow's long position.| 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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