Correlation Between ANGLO ASIAN and Yanzhou Coal

Can any of the company-specific risk be diversified away by investing in both ANGLO ASIAN and Yanzhou Coal 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 ANGLO ASIAN and Yanzhou Coal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ANGLO ASIAN MINING and Yanzhou Coal Mining, you can compare the effects of market volatilities on ANGLO ASIAN and Yanzhou Coal 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 ANGLO ASIAN with a short position of Yanzhou Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of ANGLO ASIAN and Yanzhou Coal.

Diversification Opportunities for ANGLO ASIAN and Yanzhou Coal

-0.49

Correlation Coefficient

ANGLO ASIAN  Yanzhou Coal

Very good diversification

The 3 months correlation between ANGLO and Yanzhou is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding ANGLO ASIAN MINING and Yanzhou Coal Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yanzhou Coal Mining and ANGLO ASIAN 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 ANGLO ASIAN MINING are associated (or correlated) with Yanzhou Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yanzhou Coal Mining has no effect on the direction of ANGLO ASIAN i.e., ANGLO ASIAN and Yanzhou Coal go up and down completely randomly.

Pair Corralation between ANGLO ASIAN and Yanzhou Coal

Assuming the 90 days trading horizon ANGLO ASIAN MINING is expected to generate 1.19 times more return on investment than Yanzhou Coal. However, ANGLO ASIAN is 1.19 times more volatile than Yanzhou Coal Mining. It trades about 0.09 of its potential returns per unit of risk. Yanzhou Coal Mining is currently generating about 0.0 per unit of risk. If you would invest  127.00  in ANGLO ASIAN MINING on December 21, 2024 and sell it today you would earn a total of  16.00  from holding ANGLO ASIAN MINING or generate 12.6% return on investment over 90 days.

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

ANGLO ASIAN MINING  vs.  Yanzhou Coal Mining

ANGLO ASIAN MINING

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ANGLO ASIAN MINING are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, ANGLO ASIAN exhibited solid returns over the last few months and may actually be approaching a breakup point.

Yanzhou Coal Mining

Risk-Adjusted Performance

Very Weak

Over the last 90 days Yanzhou Coal Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Yanzhou Coal is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ANGLO ASIAN and Yanzhou Coal

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

The idea behind ANGLO ASIAN MINING and Yanzhou Coal Mining 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.