Correlation Between Yancoal Australia and FIRST SAVINGS

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

By analyzing existing cross correlation between Yancoal Australia and FIRST SAVINGS FINL, you can compare the effects of market volatilities on Yancoal Australia and FIRST SAVINGS 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 FIRST SAVINGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yancoal Australia and FIRST SAVINGS.

Diversification Opportunities for Yancoal Australia and FIRST SAVINGS

0.09

Correlation Coefficient

Yancoal Australia  FIRST SAVINGS

Significant diversification

The 3 months correlation between Yancoal and FIRST is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Yancoal Australia and FIRST SAVINGS FINL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIRST SAVINGS FINL 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 FIRST SAVINGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIRST SAVINGS FINL has no effect on the direction of Yancoal Australia i.e., Yancoal Australia and FIRST SAVINGS go up and down completely randomly.

Pair Corralation between Yancoal Australia and FIRST SAVINGS

Assuming the 90 days trading horizon Yancoal Australia is expected to under-perform the FIRST SAVINGS. But the stock apears to be less risky and, when comparing its historical volatility, Yancoal Australia is 1.04 times less risky than FIRST SAVINGS. The stock trades about -0.13 of its potential returns per unit of risk. The FIRST SAVINGS FINL is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,200  in FIRST SAVINGS FINL on October 26, 2024 and sell it today you would earn a total of  40.00  from holding FIRST SAVINGS FINL or generate 1.82% return on investment over 90 days.

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

Yancoal Australia  vs.  FIRST SAVINGS FINL

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.

FIRST SAVINGS FINL

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Yancoal Australia and FIRST SAVINGS

The main advantage of trading using opposite Yancoal Australia and FIRST SAVINGS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yancoal Australia position performs unexpectedly, FIRST SAVINGS 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 FIRST SAVINGS will offset losses from the drop in FIRST SAVINGS's long position.

The idea behind Yancoal Australia and FIRST SAVINGS FINL 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.