Correlation Between Yancoal Australia and Platinum Asset

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

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

Diversification Opportunities for Yancoal Australia and Platinum Asset

0.03

Correlation Coefficient

Yancoal Australia  Platinum Asset

Significant diversification

The 3 months correlation between Yancoal and Platinum is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Yancoal Australia and Platinum Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Platinum Asset Management 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 Platinum Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Platinum Asset Management has no effect on the direction of Yancoal Australia i.e., Yancoal Australia and Platinum Asset go up and down completely randomly.

Pair Corralation between Yancoal Australia and Platinum Asset

Assuming the 90 days trading horizon Yancoal Australia is expected to generate 0.69 times more return on investment than Platinum Asset. However, Yancoal Australia is 1.45 times less risky than Platinum Asset. It trades about 0.04 of its potential returns per unit of risk. Platinum Asset Management is currently generating about 0.01 per unit of risk. If you would invest  541.00  in Yancoal Australia on October 7, 2024 and sell it today you would earn a total of  89.00  from holding Yancoal Australia or generate 16.45% 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.  Platinum Asset Management

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 essential 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.

Platinum Asset Management

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Yancoal Australia and Platinum Asset

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

The idea behind Yancoal Australia and Platinum Asset Management 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.