Correlation Between PT Bumi and Yanzhou Coal

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both PT Bumi 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 PT Bumi and Yanzhou Coal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PT Bumi Resources and Yanzhou Coal Mining, you can compare the effects of market volatilities on PT Bumi 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 PT Bumi with a short position of Yanzhou Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bumi and Yanzhou Coal.

Diversification Opportunities for PT Bumi and Yanzhou Coal

0.56
  Correlation Coefficient

Very weak diversification

The 3 months correlation between PJM and Yanzhou is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding PT Bumi Resources 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 PT Bumi 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 PT Bumi Resources 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 PT Bumi i.e., PT Bumi and Yanzhou Coal go up and down completely randomly.

Pair Corralation between PT Bumi and Yanzhou Coal

Assuming the 90 days horizon PT Bumi Resources is expected to generate 3.93 times more return on investment than Yanzhou Coal. However, PT Bumi is 3.93 times more volatile than Yanzhou Coal Mining. It trades about 0.03 of its potential returns per unit of risk. Yanzhou Coal Mining is currently generating about -0.22 per unit of risk. If you would invest  0.75  in PT Bumi Resources on September 6, 2024 and sell it today you would earn a total of  0.00  from holding PT Bumi Resources or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

PT Bumi Resources  vs.  Yanzhou Coal Mining

 Performance 
       Timeline  
PT Bumi Resources 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in PT Bumi Resources are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PT Bumi reported solid returns over the last few months and may actually be approaching a breakup point.
Yanzhou Coal Mining 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Yanzhou Coal Mining are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Yanzhou Coal may actually be approaching a critical reversion point that can send shares even higher in January 2025.

PT Bumi and Yanzhou Coal Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PT Bumi and Yanzhou Coal

The main advantage of trading using opposite PT Bumi and Yanzhou Coal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bumi 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 PT Bumi Resources 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.
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

Other Complementary Tools

Content Syndication
Quickly integrate customizable finance content to your own investment portal
Equity Search
Search for actively traded equities including funds and ETFs from over 30 global markets
Portfolio Diagnostics
Use generated alerts and portfolio events aggregator to diagnose current holdings
Options Analysis
Analyze and evaluate options and option chains as a potential hedge for your portfolios
Money Managers
Screen money managers from public funds and ETFs managed around the world