Correlation Between YAMAHA P and Yanzhou Coal

Can any of the company-specific risk be diversified away by investing in both YAMAHA P and Yanzhou Coal 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 YAMAHA P and Yanzhou Coal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between YAMAHA P and Yanzhou Coal Mining, you can compare the effects of market volatilities on YAMAHA P and Yanzhou Coal 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 YAMAHA P with a short position of Yanzhou Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of YAMAHA P and Yanzhou Coal.

Diversification Opportunities for YAMAHA P and Yanzhou Coal

0.17

Correlation Coefficient

YAMAHA P  Yanzhou Coal

Average diversification

The 3 months correlation between YAMAHA and Yanzhou is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding YAMAHA P and Yanzhou Coal Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yanzhou Coal Mining and YAMAHA P 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 YAMAHA P are associated (or correlated) with Yanzhou Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yanzhou Coal Mining has no effect on the direction of YAMAHA P i.e., YAMAHA P and Yanzhou Coal go up and down completely randomly.

Pair Corralation between YAMAHA P and Yanzhou Coal

Assuming the 90 days trading horizon YAMAHA P is expected to under-perform the Yanzhou Coal. But the stock apears to be less risky and, when comparing its historical volatility, YAMAHA P is 1.98 times less risky than Yanzhou Coal. The stock trades about -0.05 of its potential returns per unit of risk. The Yanzhou Coal Mining is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  980.00  in Yanzhou Coal Mining on October 12, 2024 and sell it today you would earn a total of  60.00  from holding Yanzhou Coal Mining or generate 6.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

YAMAHA P   vs.  Yanzhou Coal Mining

YAMAHA P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days YAMAHA P has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic 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.

Yanzhou Coal Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yanzhou Coal Mining 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 February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with YAMAHA P and Yanzhou Coal

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

The idea behind YAMAHA P and Yanzhou Coal Mining 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.