Correlation Between China Shenhua and Yancoal Australia
Can any of the company-specific risk be diversified away by investing in both China Shenhua 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 China Shenhua and Yancoal Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Shenhua Energy and Yancoal Australia, you can compare the effects of market volatilities on China Shenhua 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 China Shenhua with a short position of Yancoal Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Shenhua and Yancoal Australia.
Diversification Opportunities for China Shenhua and Yancoal Australia
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Yancoal is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding China Shenhua Energy and Yancoal Australia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yancoal Australia and China Shenhua 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 China Shenhua 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 China Shenhua i.e., China Shenhua and Yancoal Australia go up and down completely randomly.
Pair Corralation between China Shenhua and Yancoal Australia
Assuming the 90 days horizon China Shenhua Energy is expected to under-perform the Yancoal Australia. In addition to that, China Shenhua is 1.01 times more volatile than Yancoal Australia. It trades about -0.03 of its total potential returns per unit of risk. Yancoal Australia is currently generating about -0.01 per unit of volatility. If you would invest 372.00 in Yancoal Australia on December 3, 2024 and sell it today you would lose (15.00) from holding Yancoal Australia or give up 4.03% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
China Shenhua Energy vs. Yancoal Australia
Performance |
Timeline |
China Shenhua Energy |
Yancoal Australia |
China Shenhua and Yancoal Australia Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with China Shenhua and Yancoal Australia
The main advantage of trading using opposite China Shenhua and Yancoal Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Shenhua 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.China Shenhua vs. Easy Software AG | China Shenhua vs. Firan Technology Group | China Shenhua vs. Casio Computer CoLtd | China Shenhua vs. Check Point Software |
Yancoal Australia vs. Luckin Coffee | Yancoal Australia vs. Monster Beverage Corp | Yancoal Australia vs. Maple Leaf Foods | Yancoal Australia vs. Nomad Foods |
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 CEOs Directory module to screen CEOs from public companies around the world.
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