Correlation Between Yanzhou Coal and Insurance Australia
Can any of the company-specific risk be diversified away by investing in both Yanzhou Coal and Insurance Australia 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 Insurance Australia 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 Insurance Australia Group, you can compare the effects of market volatilities on Yanzhou Coal and Insurance Australia 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 Insurance Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yanzhou Coal and Insurance Australia.
Diversification Opportunities for Yanzhou Coal and Insurance Australia
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Yanzhou and Insurance is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Yanzhou Coal Mining and Insurance Australia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insurance Australia 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 Insurance Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insurance Australia has no effect on the direction of Yanzhou Coal i.e., Yanzhou Coal and Insurance Australia go up and down completely randomly.
Pair Corralation between Yanzhou Coal and Insurance Australia
Assuming the 90 days horizon Yanzhou Coal Mining is expected to under-perform the Insurance Australia. In addition to that, Yanzhou Coal is 1.12 times more volatile than Insurance Australia Group. It trades about -0.13 of its total potential returns per unit of risk. Insurance Australia Group is currently generating about 0.17 per unit of volatility. If you would invest 444.00 in Insurance Australia Group on October 31, 2024 and sell it today you would earn a total of 81.00 from holding Insurance Australia Group or generate 18.24% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Yanzhou Coal Mining vs. Insurance Australia Group
Performance |
Timeline |
Yanzhou Coal Mining |
Insurance Australia |
Yanzhou Coal and Insurance Australia Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Yanzhou Coal and Insurance Australia
The main advantage of trading using opposite Yanzhou Coal and Insurance Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yanzhou Coal position performs unexpectedly, Insurance Australia 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 Insurance Australia will offset losses from the drop in Insurance Australia's long position.Yanzhou Coal vs. Easy Software AG | ||
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Check out your portfolio center.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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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