Correlation Between VIVA WINE and Yanzhou Coal

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

By analyzing existing cross correlation between VIVA WINE GROUP and Yanzhou Coal Mining, you can compare the effects of market volatilities on VIVA WINE 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 VIVA WINE with a short position of Yanzhou Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of VIVA WINE and Yanzhou Coal.

Diversification Opportunities for VIVA WINE and Yanzhou Coal

0.16

Correlation Coefficient

VIVA WINE  Yanzhou Coal

Average diversification

The 3 months correlation between VIVA and Yanzhou is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding VIVA WINE GROUP 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 VIVA WINE 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 VIVA WINE GROUP 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 VIVA WINE i.e., VIVA WINE and Yanzhou Coal go up and down completely randomly.

Pair Corralation between VIVA WINE and Yanzhou Coal

Assuming the 90 days horizon VIVA WINE GROUP is expected to generate 0.68 times more return on investment than Yanzhou Coal. However, VIVA WINE GROUP is 1.48 times less risky than Yanzhou Coal. It trades about 0.15 of its potential returns per unit of risk. Yanzhou Coal Mining is currently generating about 0.0 per unit of risk. If you would invest  322.00  in VIVA WINE GROUP on December 28, 2024 and sell it today you would earn a total of  52.00  from holding VIVA WINE GROUP or generate 16.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

VIVA WINE GROUP  vs.  Yanzhou Coal Mining

VIVA WINE GROUP

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VIVA WINE GROUP are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, VIVA WINE reported solid returns over the last few months and may actually be approaching a breakup point.

Yanzhou Coal Mining

Risk-Adjusted Performance

Very Weak

Over the last 90 days Yanzhou Coal Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Yanzhou Coal is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with VIVA WINE and Yanzhou Coal

The main advantage of trading using opposite VIVA WINE and Yanzhou Coal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VIVA WINE 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.

The idea behind VIVA WINE GROUP and Yanzhou Coal Mining 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..