Correlation Between US Silica and Zijin Mining

Can any of the company-specific risk be diversified away by investing in both US Silica and Zijin Mining 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 US Silica and Zijin Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between US Silica Holdings and Zijin Mining Group, you can compare the effects of market volatilities on US Silica and Zijin Mining 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 US Silica with a short position of Zijin Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Silica and Zijin Mining.

Diversification Opportunities for US Silica and Zijin Mining

0.91

Correlation Coefficient

US Silica  Zijin Mining

Almost no diversification

The 3 months correlation between SLCA and Zijin is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding US Silica Holdings and Zijin Mining Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zijin Mining Group and US Silica 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 US Silica Holdings are associated (or correlated) with Zijin Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zijin Mining Group has no effect on the direction of US Silica i.e., US Silica and Zijin Mining go up and down completely randomly.

Pair Corralation between US Silica and Zijin Mining

Given the investment horizon of 90 days US Silica Holdings is expected to generate 1.7 times more return on investment than Zijin Mining. However, US Silica is 1.7 times more volatile than Zijin Mining Group. It trades about 0.25 of its potential returns per unit of risk. Zijin Mining Group is currently generating about 0.18 per unit of risk. If you would invest  1,244  in US Silica Holdings on January 29, 2024 and sell it today you would earn a total of  345.00  from holding US Silica Holdings or generate 27.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

US Silica Holdings  vs.  Zijin Mining Group

US Silica Holdings

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in US Silica Holdings are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal fundamental indicators, US Silica sustained solid returns over the last few months and may actually be approaching a breakup point.

Zijin Mining Group

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Zijin Mining Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Zijin Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with US Silica and Zijin Mining

The main advantage of trading using opposite US Silica and Zijin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Silica position performs unexpectedly, Zijin Mining 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 Zijin Mining will offset losses from the drop in Zijin Mining's long position.

The idea behind US Silica Holdings and Zijin Mining Group 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.