Correlation Between Apple and Yancoal Australia

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

By analyzing existing cross correlation between Apple Inc and Yancoal Australia, you can compare the effects of market volatilities on Apple 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 Apple with a short position of Yancoal Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Yancoal Australia.

Diversification Opportunities for Apple and Yancoal Australia

-0.35

Correlation Coefficient

Apple  Yancoal Australia

Very good diversification

The 3 months correlation between Apple and Yancoal is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Yancoal Australia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yancoal Australia and Apple 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 Apple Inc 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 Apple i.e., Apple and Yancoal Australia go up and down completely randomly.

Pair Corralation between Apple and Yancoal Australia

Given the investment horizon of 90 days Apple Inc is expected to under-perform the Yancoal Australia. But the stock apears to be less risky and, when comparing its historical volatility, Apple Inc is 3.0 times less risky than Yancoal Australia. The stock trades about -0.05 of its potential returns per unit of risk. The Yancoal Australia is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  415.00  in Yancoal Australia on October 26, 2024 and sell it today you would earn a total of  4.00  from holding Yancoal Australia or generate 0.96% return on investment over 90 days.

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

Apple Inc  vs.  Yancoal Australia

Apple Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apple Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Apple is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Yancoal Australia

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Yancoal Australia are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Yancoal Australia is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Apple and Yancoal Australia

The main advantage of trading using opposite Apple and Yancoal Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.

The idea behind Apple Inc and Yancoal Australia 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.