Correlation Between Yanzhou Coal and Perseus Mining

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

Diversification Opportunities for Yanzhou Coal and Perseus Mining

0.28

Correlation Coefficient

Yanzhou Coal  Perseus Mining

Modest diversification

The 3 months correlation between Yanzhou and Perseus is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Yanzhou Coal Mining and Perseus Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perseus 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 Perseus Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perseus Mining has no effect on the direction of Yanzhou Coal i.e., Yanzhou Coal and Perseus Mining go up and down completely randomly.

Pair Corralation between Yanzhou Coal and Perseus Mining

Assuming the 90 days horizon Yanzhou Coal Mining is expected to under-perform the Perseus Mining. In addition to that, Yanzhou Coal is 1.02 times more volatile than Perseus Mining Limited. It trades about -0.05 of its total potential returns per unit of risk. Perseus Mining Limited is currently generating about 0.01 per unit of volatility. If you would invest  156.00  in Perseus Mining Limited on October 9, 2024 and sell it today you would lose (1.00) from holding Perseus Mining Limited or give up 0.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Yanzhou Coal Mining  vs.  Perseus Mining Limited

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

Perseus Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Perseus Mining Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Perseus Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Yanzhou Coal and Perseus Mining

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

The idea behind Yanzhou Coal Mining and Perseus Mining Limited 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.