Correlation Between VULCAN MATERIALS and Yancoal Australia

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

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

Diversification Opportunities for VULCAN MATERIALS and Yancoal Australia

0.52

Correlation Coefficient

VULCAN MATERIALS  Yancoal Australia

Very weak diversification

The 3 months correlation between VULCAN and Yancoal is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding VULCAN MATERIALS and Yancoal Australia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yancoal Australia and VULCAN MATERIALS 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 VULCAN MATERIALS 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 VULCAN MATERIALS i.e., VULCAN MATERIALS and Yancoal Australia go up and down completely randomly.

Pair Corralation between VULCAN MATERIALS and Yancoal Australia

Assuming the 90 days trading horizon VULCAN MATERIALS is expected to generate about the same return on investment as Yancoal Australia. But, VULCAN MATERIALS is 1.65 times less risky than Yancoal Australia. It trades about -0.13 of its potential returns per unit of risk. Yancoal Australia is currently generating about -0.08 per unit of risk. If you would invest  351.00  in Yancoal Australia on December 22, 2024 and sell it today you would lose (51.00) from holding Yancoal Australia or give up 14.53% of portfolio value over 90 days.

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

VULCAN MATERIALS  vs.  Yancoal Australia

VULCAN MATERIALS

Risk-Adjusted Performance

Very Weak

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

Yancoal Australia

Risk-Adjusted Performance

Very Weak

Over the last 90 days Yancoal Australia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with VULCAN MATERIALS and Yancoal Australia

The main advantage of trading using opposite VULCAN MATERIALS and Yancoal Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VULCAN MATERIALS 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 VULCAN MATERIALS 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.