Correlation Between PT Adaro and Yanzhou Coal
Can any of the company-specific risk be diversified away by investing in both PT Adaro 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 PT Adaro and Yanzhou Coal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PT Adaro Energy and Yanzhou Coal Mining, you can compare the effects of market volatilities on PT Adaro 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 PT Adaro with a short position of Yanzhou Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Adaro and Yanzhou Coal.
Diversification Opportunities for PT Adaro and Yanzhou Coal
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between A64 and Yanzhou is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding PT Adaro Energy 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 PT Adaro 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 PT Adaro Energy 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 PT Adaro i.e., PT Adaro and Yanzhou Coal go up and down completely randomly.
Pair Corralation between PT Adaro and Yanzhou Coal
Assuming the 90 days horizon PT Adaro Energy is expected to under-perform the Yanzhou Coal. In addition to that, PT Adaro is 1.97 times more volatile than Yanzhou Coal Mining. It trades about -0.04 of its total potential returns per unit of risk. Yanzhou Coal Mining is currently generating about 0.04 per unit of volatility. If you would invest 1,051 in Yanzhou Coal Mining on September 6, 2024 and sell it today you would earn a total of 49.00 from holding Yanzhou Coal Mining or generate 4.66% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
PT Adaro Energy vs. Yanzhou Coal Mining
Performance |
Timeline |
PT Adaro Energy |
Yanzhou Coal Mining |
PT Adaro and Yanzhou Coal Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with PT Adaro and Yanzhou Coal
The main advantage of trading using opposite PT Adaro and Yanzhou Coal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Adaro 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.PT Adaro vs. PT Bayan Resources | PT Adaro vs. Yanzhou Coal Mining | PT Adaro vs. Yanzhou Coal Mining | PT Adaro vs. PT Bumi Resources |
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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 the Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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