Correlation Between Virtus Investment and Yancoal Australia

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

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

Diversification Opportunities for Virtus Investment and Yancoal Australia

0.0

Correlation Coefficient

Virtus Investment  Yancoal Australia

Pay attention - limited upside

The 3 months correlation between Virtus and Yancoal is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Investment Partners and Yancoal Australia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yancoal Australia and Virtus Investment 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 Virtus Investment Partners 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 Virtus Investment i.e., Virtus Investment and Yancoal Australia go up and down completely randomly.

Pair Corralation between Virtus Investment and Yancoal Australia

Assuming the 90 days horizon Virtus Investment Partners is expected to under-perform the Yancoal Australia. But the stock apears to be less risky and, when comparing its historical volatility, Virtus Investment Partners is 1.74 times less risky than Yancoal Australia. The stock trades about -0.13 of its potential returns per unit of risk. The Yancoal Australia is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  374.00  in Yancoal Australia on October 23, 2024 and sell it today you would lose (6.00) from holding Yancoal Australia or give up 1.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	94.12%
Values	Daily Returns

Virtus Investment Partners  vs.  Yancoal Australia

Virtus Investment

Risk-Adjusted Performance

3 of 100

Insignificant

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

Yancoal Australia

Risk-Adjusted Performance

0 of 100

Very 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 basic 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 Virtus Investment and Yancoal Australia

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

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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.