Correlation Between Yanzhou Coal and INTER CARS

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

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

Diversification Opportunities for Yanzhou Coal and INTER CARS

-0.72

Correlation Coefficient

Yanzhou Coal  INTER CARS

Pay attention - limited upside

The 3 months correlation between Yanzhou and INTER is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Yanzhou Coal Mining and INTER CARS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTER CARS SA and Yanzhou Coal 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 Yanzhou Coal Mining are associated (or correlated) with INTER CARS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTER CARS SA has no effect on the direction of Yanzhou Coal i.e., Yanzhou Coal and INTER CARS go up and down completely randomly.

Pair Corralation between Yanzhou Coal and INTER CARS

Assuming the 90 days horizon Yanzhou Coal Mining is expected to generate 2.11 times more return on investment than INTER CARS. However, Yanzhou Coal is 2.11 times more volatile than INTER CARS SA. It trades about 0.02 of its potential returns per unit of risk. INTER CARS SA is currently generating about 0.03 per unit of risk. If you would invest  993.00  in Yanzhou Coal Mining on October 24, 2024 and sell it today you would lose (18.00) from holding Yanzhou Coal Mining or give up 1.81% of portfolio value over 90 days.

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

Yanzhou Coal Mining  vs.  INTER CARS SA

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 uncertain 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.

INTER CARS SA

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in INTER CARS SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, INTER CARS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Yanzhou Coal and INTER CARS

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

The idea behind Yanzhou Coal Mining and INTER CARS SA 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.