Correlation Between Yancoal Australia and PT Adaro

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

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

Diversification Opportunities for Yancoal Australia and PT Adaro

0.0

Correlation Coefficient

Yancoal Australia  PT Adaro

Pay attention - limited upside

The 3 months correlation between Yancoal and PADEF is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Yancoal Australia and PT Adaro Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Adaro Energy 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 PT Adaro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Adaro Energy has no effect on the direction of Yancoal Australia i.e., Yancoal Australia and PT Adaro go up and down completely randomly.

Pair Corralation between Yancoal Australia and PT Adaro

If you would invest (100.00) in PT Adaro Energy on December 29, 2024 and sell it today you would earn a total of  100.00  from holding PT Adaro Energy or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Yancoal Australia  vs.  PT Adaro Energy

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.

PT Adaro Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days PT Adaro Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, PT Adaro is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Yancoal Australia and PT Adaro

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

The idea behind Yancoal Australia and PT Adaro Energy 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.