Correlation Between Ras Technology and Yancoal Australia

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

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

Diversification Opportunities for Ras Technology and Yancoal Australia

0.06

Correlation Coefficient

Ras Technology  Yancoal Australia

Significant diversification

The 3 months correlation between Ras and Yancoal is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Ras Technology Holdings and Yancoal Australia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yancoal Australia and Ras Technology 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 Ras Technology Holdings 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 Ras Technology i.e., Ras Technology and Yancoal Australia go up and down completely randomly.

Pair Corralation between Ras Technology and Yancoal Australia

Assuming the 90 days trading horizon Ras Technology Holdings is expected to generate 1.87 times more return on investment than Yancoal Australia. However, Ras Technology is 1.87 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 0.04 per unit of risk. If you would invest  42.00  in Ras Technology Holdings on October 10, 2024 and sell it today you would earn a total of  46.00  from holding Ras Technology Holdings or generate 109.52% return on investment over 90 days.

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

Ras Technology Holdings  vs.  Yancoal Australia

Ras Technology Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ras Technology Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Yancoal Australia

Risk-Adjusted Performance

0 of 100

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 Ras Technology and Yancoal Australia

The main advantage of trading using opposite Ras Technology and Yancoal Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ras Technology 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 Ras Technology Holdings 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.

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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.