Correlation Between Zijin Mining and Hercules Silver

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Can any of the company-specific risk be diversified away by investing in both Zijin Mining and Hercules Silver 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 Hercules Silver into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zijin Mining Gp and Hercules Silver Corp, you can compare the effects of market volatilities on Zijin Mining and Hercules Silver 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 Hercules Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zijin Mining and Hercules Silver.

Diversification Opportunities for Zijin Mining and Hercules Silver

0.77
  Correlation Coefficient

Poor diversification

The 3 months correlation between Zijin and Hercules is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Gp and Hercules Silver Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hercules Silver Corp 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 Gp are associated (or correlated) with Hercules Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hercules Silver Corp has no effect on the direction of Zijin Mining i.e., Zijin Mining and Hercules Silver go up and down completely randomly.

Pair Corralation between Zijin Mining and Hercules Silver

Assuming the 90 days horizon Zijin Mining is expected to generate 1.41 times less return on investment than Hercules Silver. But when comparing it to its historical volatility, Zijin Mining Gp is 1.66 times less risky than Hercules Silver. It trades about 0.28 of its potential returns per unit of risk. Hercules Silver Corp is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  4.71  in Hercules Silver Corp on August 29, 2022 and sell it today you would earn a total of  1.29  from holding Hercules Silver Corp or generate 27.39% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Zijin Mining Gp  vs.  Hercules Silver Corp

 Performance (%) 
       Timeline  
Zijin Mining Gp 
Zijin Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Zijin Mining Gp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, Zijin Mining is not utilizing all of its potentials. The new stock price tumult, may contribute to shorter-term losses for the shareholders.

Zijin Price Channel

Hercules Silver Corp 
Hercules Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Hercules Silver Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Hercules Silver exhibited solid returns over the last few months and may actually be approaching a breakup point.

Hercules Price Channel

Zijin Mining and Hercules Silver Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Zijin Mining and Hercules Silver

The main advantage of trading using opposite Zijin Mining and Hercules Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zijin Mining position performs unexpectedly, Hercules Silver 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 Hercules Silver will offset losses from the drop in Hercules Silver's long position.
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The idea behind Zijin Mining Gp and Hercules Silver Corp 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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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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