Correlation Between GOODTECH ASA and Yancoal Australia
Can any of the company-specific risk be diversified away by investing in both GOODTECH ASA and Yancoal Australia 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 GOODTECH ASA and Yancoal Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GOODTECH ASA A and Yancoal Australia, you can compare the effects of market volatilities on GOODTECH ASA and Yancoal Australia 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 GOODTECH ASA with a short position of Yancoal Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of GOODTECH ASA and Yancoal Australia.
Diversification Opportunities for GOODTECH ASA and Yancoal Australia
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GOODTECH and Yancoal is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding GOODTECH ASA A and Yancoal Australia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yancoal Australia and GOODTECH ASA 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 GOODTECH ASA A are associated (or correlated) with Yancoal Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yancoal Australia has no effect on the direction of GOODTECH ASA i.e., GOODTECH ASA and Yancoal Australia go up and down completely randomly.
Pair Corralation between GOODTECH ASA and Yancoal Australia
Assuming the 90 days horizon GOODTECH ASA is expected to generate 2.25 times less return on investment than Yancoal Australia. But when comparing it to its historical volatility, GOODTECH ASA A is 1.54 times less risky than Yancoal Australia. It trades about 0.03 of its potential returns per unit of risk. Yancoal Australia is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 253.00 in Yancoal Australia on September 23, 2024 and sell it today you would earn a total of 117.00 from holding Yancoal Australia or generate 46.25% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
GOODTECH ASA A vs. Yancoal Australia
Performance |
Timeline |
GOODTECH ASA A |
Yancoal Australia |
GOODTECH ASA and Yancoal Australia Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GOODTECH ASA and Yancoal Australia
The main advantage of trading using opposite GOODTECH ASA and Yancoal Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GOODTECH ASA position performs unexpectedly, Yancoal Australia 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 Yancoal Australia will offset losses from the drop in Yancoal Australia's long position.GOODTECH ASA vs. Vinci S A | GOODTECH ASA vs. Johnson Controls International | GOODTECH ASA vs. Larsen Toubro Limited | GOODTECH ASA vs. China Railway Group |
Yancoal Australia vs. CHINA SHENHUA ENA | Yancoal Australia vs. China Coal Energy | Yancoal Australia vs. Banpu PCL | Yancoal Australia vs. CONSOL Energy |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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