Correlation Between Safety Insurance and Yanzhou Coal
Can any of the company-specific risk be diversified away by investing in both Safety Insurance 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 Safety Insurance and Yanzhou Coal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Safety Insurance Group and Yanzhou Coal Mining, you can compare the effects of market volatilities on Safety Insurance 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 Safety Insurance with a short position of Yanzhou Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safety Insurance and Yanzhou Coal.
Diversification Opportunities for Safety Insurance and Yanzhou Coal
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Safety and Yanzhou is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Safety Insurance 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 Safety Insurance 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 Safety Insurance 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 Safety Insurance i.e., Safety Insurance and Yanzhou Coal go up and down completely randomly.
Pair Corralation between Safety Insurance and Yanzhou Coal
Assuming the 90 days horizon Safety Insurance Group is expected to under-perform the Yanzhou Coal. But the stock apears to be less risky and, when comparing its historical volatility, Safety Insurance Group is 1.52 times less risky than Yanzhou Coal. The stock trades about -0.09 of its potential returns per unit of risk. The Yanzhou Coal Mining is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 112.00 in Yanzhou Coal Mining on December 4, 2024 and sell it today you would lose (11.00) from holding Yanzhou Coal Mining or give up 9.82% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Safety Insurance Group vs. Yanzhou Coal Mining
Performance |
Timeline |
Safety Insurance |
Yanzhou Coal Mining |
Safety Insurance and Yanzhou Coal Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Safety Insurance and Yanzhou Coal
The main advantage of trading using opposite Safety Insurance and Yanzhou Coal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safety Insurance 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.Safety Insurance vs. Coor Service Management | Safety Insurance vs. REGAL ASIAN INVESTMENTS | Safety Insurance vs. MTI INVESTMENT SE | Safety Insurance vs. Ares Management Corp |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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