Correlation Between Zijin Mining and Fortitude Gold

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

Diversification Opportunities for Zijin Mining and Fortitude Gold

-0.08

Correlation Coefficient

Zijin Mining  Fortitude Gold

Good diversification

The 3 months correlation between Zijin and Fortitude is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and Fortitude Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortitude Gold 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 Group are associated (or correlated) with Fortitude Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortitude Gold Corp has no effect on the direction of Zijin Mining i.e., Zijin Mining and Fortitude Gold go up and down completely randomly.

Pair Corralation between Zijin Mining and Fortitude Gold

Assuming the 90 days horizon Zijin Mining Group is expected to generate 1.58 times more return on investment than Fortitude Gold. However, Zijin Mining is 1.58 times more volatile than Fortitude Gold Corp. It trades about 0.05 of its potential returns per unit of risk. Fortitude Gold Corp is currently generating about 0.01 per unit of risk. If you would invest  195.00  in Zijin Mining Group on January 14, 2025 and sell it today you would earn a total of  15.00  from holding Zijin Mining Group or generate 7.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Zijin Mining Group  vs.  Fortitude Gold Corp

Zijin Mining Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Zijin Mining Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Zijin Mining may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Fortitude Gold Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fortitude Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Fortitude Gold is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Zijin Mining and Fortitude Gold

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

The idea behind Zijin Mining Group and Fortitude Gold 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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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.