Correlation Between Zijin Mining and West African

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Can any of the company-specific risk be diversified away by investing in both Zijin Mining and West African 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 West African 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 West African Resources, you can compare the effects of market volatilities on Zijin Mining and West African 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 West African. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zijin Mining and West African.

Diversification Opportunities for Zijin Mining and West African

ZijinWestDiversified AwayZijinWestDiversified Away100%
0.78
  Correlation Coefficient

Poor diversification

The 3 months correlation between Zijin and West is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and West African Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on West African Resources 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 West African. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of West African Resources has no effect on the direction of Zijin Mining i.e., Zijin Mining and West African go up and down completely randomly.

Pair Corralation between Zijin Mining and West African

Assuming the 90 days horizon Zijin Mining is expected to generate 10.35 times less return on investment than West African. But when comparing it to its historical volatility, Zijin Mining Group is 3.39 times less risky than West African. It trades about 0.03 of its potential returns per unit of risk. West African Resources is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  63.00  in West African Resources on November 21, 2024 and sell it today you would earn a total of  53.00  from holding West African Resources or generate 84.13% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy90.43%
ValuesDaily Returns

Zijin Mining Group  vs.  West African Resources

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -10-5051015
JavaScript chart by amCharts 3.21.15ZIJMY WFRSF
       Timeline  
Zijin Mining Group 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Zijin Mining Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain primary indicators, Zijin Mining may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb363738394041424344
West African Resources 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in West African Resources are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, West African reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.80.911.11.2

Zijin Mining and West African Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-8.07-6.05-4.02-1.990.03381.984.026.078.1210.16 0.020.030.040.050.06
JavaScript chart by amCharts 3.21.15ZIJMY WFRSF
       Returns  

Pair Trading with Zijin Mining and West African

The main advantage of trading using opposite Zijin Mining and West African positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zijin Mining position performs unexpectedly, West African 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 West African will offset losses from the drop in West African's long position.
The idea behind Zijin Mining Group and West African Resources 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.

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