Correlation Between Yanzhou Coal and AptarGroup

Can any of the company-specific risk be diversified away by investing in both Yanzhou Coal and AptarGroup 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 AptarGroup 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 AptarGroup, you can compare the effects of market volatilities on Yanzhou Coal and AptarGroup 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 AptarGroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yanzhou Coal and AptarGroup.

Diversification Opportunities for Yanzhou Coal and AptarGroup

0.49

Correlation Coefficient

Yanzhou Coal  AptarGroup

Very weak diversification

The 3 months correlation between Yanzhou and AptarGroup is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Yanzhou Coal Mining and AptarGroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AptarGroup 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 AptarGroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AptarGroup has no effect on the direction of Yanzhou Coal i.e., Yanzhou Coal and AptarGroup go up and down completely randomly.

Pair Corralation between Yanzhou Coal and AptarGroup

Assuming the 90 days horizon Yanzhou Coal Mining is expected to generate 1.44 times more return on investment than AptarGroup. However, Yanzhou Coal is 1.44 times more volatile than AptarGroup. It trades about -0.02 of its potential returns per unit of risk. AptarGroup is currently generating about -0.13 per unit of risk. If you would invest  1,080  in Yanzhou Coal Mining on December 25, 2024 and sell it today you would lose (40.00) from holding Yanzhou Coal Mining or give up 3.7% of portfolio value over 90 days.

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

Yanzhou Coal Mining  vs.  AptarGroup

Yanzhou Coal Mining

Risk-Adjusted Performance

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 nearly stable basic indicators, Yanzhou Coal is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

AptarGroup

Risk-Adjusted Performance

Very Weak

Over the last 90 days AptarGroup has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Yanzhou Coal and AptarGroup

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

The idea behind Yanzhou Coal Mining and AptarGroup 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.