Correlation Between Yancoal Australia and Japan Asia

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

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

Diversification Opportunities for Yancoal Australia and Japan Asia

-0.54

Correlation Coefficient

Yancoal Australia  Japan Asia

Excellent diversification

The 3 months correlation between Yancoal and Japan is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Yancoal Australia and Japan Asia Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Asia Investment 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 Japan Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Asia Investment has no effect on the direction of Yancoal Australia i.e., Yancoal Australia and Japan Asia go up and down completely randomly.

Pair Corralation between Yancoal Australia and Japan Asia

Assuming the 90 days trading horizon Yancoal Australia is expected to under-perform the Japan Asia. In addition to that, Yancoal Australia is 1.13 times more volatile than Japan Asia Investment. It trades about -0.05 of its total potential returns per unit of risk. Japan Asia Investment is currently generating about 0.18 per unit of volatility. If you would invest  122.00  in Japan Asia Investment on December 22, 2024 and sell it today you would earn a total of  39.00  from holding Japan Asia Investment or generate 31.97% return on investment over 90 days.

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

Yancoal Australia  vs.  Japan Asia Investment

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. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Japan Asia Investment

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Japan Asia Investment are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Japan Asia reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Yancoal Australia and Japan Asia

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

The idea behind Yancoal Australia and Japan Asia Investment 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.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..