Correlation Between Hallador Energy and Yancoal Australia

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

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

Diversification Opportunities for Hallador Energy and Yancoal Australia

-0.34

Correlation Coefficient

Hallador Energy  Yancoal Australia

Very good diversification

The 3 months correlation between Hallador and Yancoal is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Hallador Energy and Yancoal Australia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yancoal Australia and Hallador Energy 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 Hallador Energy 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 Hallador Energy i.e., Hallador Energy and Yancoal Australia go up and down completely randomly.

Pair Corralation between Hallador Energy and Yancoal Australia

Given the investment horizon of 90 days Hallador Energy is expected to generate 1.42 times more return on investment than Yancoal Australia. However, Hallador Energy is 1.42 times more volatile than Yancoal Australia. It trades about 0.06 of its potential returns per unit of risk. Yancoal Australia is currently generating about -0.09 per unit of risk. If you would invest  1,126  in Hallador Energy on December 30, 2024 and sell it today you would earn a total of  125.00  from holding Hallador Energy or generate 11.1% return on investment over 90 days.

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

Hallador Energy  vs.  Yancoal Australia

Hallador Energy

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hallador Energy are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Hallador Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Yancoal Australia

Risk-Adjusted Performance

Very Weak

Over the last 90 days Yancoal Australia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Hallador Energy and Yancoal Australia

The main advantage of trading using opposite Hallador Energy and Yancoal Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hallador Energy 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 Hallador Energy 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 CEOs Directory module to screen CEOs from public companies around the world.