Correlation Between Yancoal Australia and New Hope
Can any of the company-specific risk be diversified away by investing in both Yancoal Australia and New Hope 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 Yancoal Australia and New Hope into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yancoal Australia and New Hope, you can compare the effects of market volatilities on Yancoal Australia and New Hope 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 Yancoal Australia with a short position of New Hope. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yancoal Australia and New Hope.
Diversification Opportunities for Yancoal Australia and New Hope
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Yancoal and New is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Yancoal Australia and New Hope in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Hope and Yancoal Australia 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 Yancoal Australia are associated (or correlated) with New Hope. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Hope has no effect on the direction of Yancoal Australia i.e., Yancoal Australia and New Hope go up and down completely randomly.
Pair Corralation between Yancoal Australia and New Hope
Assuming the 90 days horizon Yancoal Australia is expected to generate 1.48 times more return on investment than New Hope. However, Yancoal Australia is 1.48 times more volatile than New Hope. It trades about 0.06 of its potential returns per unit of risk. New Hope is currently generating about 0.02 per unit of risk. If you would invest 264.00 in Yancoal Australia on September 14, 2024 and sell it today you would earn a total of 118.00 from holding Yancoal Australia or generate 44.7% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Yancoal Australia vs. New Hope
Performance |
Timeline |
Yancoal Australia |
New Hope |
Yancoal Australia and New Hope Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Yancoal Australia and New Hope
The main advantage of trading using opposite Yancoal Australia and New Hope positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yancoal Australia position performs unexpectedly, New Hope 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 New Hope will offset losses from the drop in New Hope's long position.Yancoal Australia vs. China Shenhua Energy | Yancoal Australia vs. PT Bayan Resources | Yancoal Australia vs. Yanzhou Coal Mining | Yancoal Australia vs. Yanzhou Coal Mining |
New Hope vs. Warner Music Group | New Hope vs. Tencent Music Entertainment | New Hope vs. MOLSON RS BEVERAGE | New Hope vs. UNIVERSAL MUSIC GROUP |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
Global Correlations Find global opportunities by holding instruments from different markets |