Correlation Between Yanzhou Coal and De Grey

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

Diversification Opportunities for Yanzhou Coal and De Grey

-0.7

Correlation Coefficient

Yanzhou Coal  De Grey

Excellent diversification

The 3 months correlation between Yanzhou and DGD is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Yanzhou Coal Mining and De Grey Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on De Grey Mining 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 De Grey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of De Grey Mining has no effect on the direction of Yanzhou Coal i.e., Yanzhou Coal and De Grey go up and down completely randomly.

Pair Corralation between Yanzhou Coal and De Grey

Assuming the 90 days horizon Yanzhou Coal Mining is expected to under-perform the De Grey. But the stock apears to be less risky and, when comparing its historical volatility, Yanzhou Coal Mining is 1.07 times less risky than De Grey. The stock trades about -0.25 of its potential returns per unit of risk. The De Grey Mining is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest  117.00  in De Grey Mining on October 11, 2024 and sell it today you would lose (7.00) from holding De Grey Mining or give up 5.98% 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.  De Grey Mining

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.

De Grey Mining

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in De Grey Mining are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, De Grey unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Yanzhou Coal and De Grey

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

The idea behind Yanzhou Coal Mining and De Grey 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.