Correlation Between Yanzhou Coal and SCANSOURCE (SC3SG)

Can any of the company-specific risk be diversified away by investing in both Yanzhou Coal and SCANSOURCE (SC3SG) 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 SCANSOURCE (SC3SG) 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 SCANSOURCE, you can compare the effects of market volatilities on Yanzhou Coal and SCANSOURCE (SC3SG) 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 SCANSOURCE (SC3SG). Check out your portfolio center. Please also check ongoing floating volatility patterns of Yanzhou Coal and SCANSOURCE (SC3SG).

Diversification Opportunities for Yanzhou Coal and SCANSOURCE (SC3SG)

-0.54

Correlation Coefficient

Yanzhou Coal  SCANSOURCE (SC3SG)

Excellent diversification

The 3 months correlation between Yanzhou and SCANSOURCE is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Yanzhou Coal Mining and SCANSOURCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCANSOURCE (SC3SG) 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 SCANSOURCE (SC3SG). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCANSOURCE (SC3SG) has no effect on the direction of Yanzhou Coal i.e., Yanzhou Coal and SCANSOURCE (SC3SG) go up and down completely randomly.

Pair Corralation between Yanzhou Coal and SCANSOURCE (SC3SG)

Assuming the 90 days horizon Yanzhou Coal Mining is expected to under-perform the SCANSOURCE (SC3SG). But the stock apears to be less risky and, when comparing its historical volatility, Yanzhou Coal Mining is 1.26 times less risky than SCANSOURCE (SC3SG). The stock trades about -0.1 of its potential returns per unit of risk. The SCANSOURCE is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  4,320  in SCANSOURCE on October 10, 2024 and sell it today you would earn a total of  220.00  from holding SCANSOURCE or generate 5.09% return on investment over 90 days.

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

Yanzhou Coal Mining  vs.  SCANSOURCE

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 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.

SCANSOURCE (SC3SG)

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SCANSOURCE are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SCANSOURCE (SC3SG) may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Yanzhou Coal and SCANSOURCE (SC3SG)

The main advantage of trading using opposite Yanzhou Coal and SCANSOURCE (SC3SG) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yanzhou Coal position performs unexpectedly, SCANSOURCE (SC3SG) 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 SCANSOURCE (SC3SG) will offset losses from the drop in SCANSOURCE (SC3SG)'s long position.

The idea behind Yanzhou Coal Mining and SCANSOURCE 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.