Correlation Between Garda Diversified and Yancoal Australia

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

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

Diversification Opportunities for Garda Diversified and Yancoal Australia

0.37

Correlation Coefficient

Garda Diversified  Yancoal Australia

Weak diversification

The 3 months correlation between Garda and Yancoal is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Garda Diversified Ppty and Yancoal Australia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yancoal Australia and Garda Diversified 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 Garda Diversified Ppty 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 Garda Diversified i.e., Garda Diversified and Yancoal Australia go up and down completely randomly.

Pair Corralation between Garda Diversified and Yancoal Australia

Assuming the 90 days trading horizon Garda Diversified Ppty is expected to generate 0.75 times more return on investment than Yancoal Australia. However, Garda Diversified Ppty is 1.33 times less risky than Yancoal Australia. It trades about 0.04 of its potential returns per unit of risk. Yancoal Australia is currently generating about 0.01 per unit of risk. If you would invest  115.00  in Garda Diversified Ppty on October 6, 2024 and sell it today you would earn a total of  3.00  from holding Garda Diversified Ppty or generate 2.61% return on investment over 90 days.

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

Garda Diversified Ppty  vs.  Yancoal Australia

Garda Diversified Ppty

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Garda Diversified Ppty are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Garda Diversified is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Yancoal Australia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yancoal Australia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Yancoal Australia is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Garda Diversified and Yancoal Australia

The main advantage of trading using opposite Garda Diversified and Yancoal Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Garda Diversified 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 Garda Diversified Ppty 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.