Correlation Between Yanzhou Coal and Unity Software

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

Diversification Opportunities for Yanzhou Coal and Unity Software

-0.56

Correlation Coefficient

Yanzhou Coal  Unity Software

Excellent diversification

The 3 months correlation between Yanzhou and Unity is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Yanzhou Coal Mining and Unity Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unity Software 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 Unity Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unity Software has no effect on the direction of Yanzhou Coal i.e., Yanzhou Coal and Unity Software go up and down completely randomly.

Pair Corralation between Yanzhou Coal and Unity Software

Assuming the 90 days horizon Yanzhou Coal Mining is expected to generate 0.97 times more return on investment than Unity Software. However, Yanzhou Coal Mining is 1.03 times less risky than Unity Software. It trades about 0.02 of its potential returns per unit of risk. Unity Software is currently generating about 0.01 per unit of risk. If you would invest  967.00  in Yanzhou Coal Mining on October 11, 2024 and sell it today you would earn a total of  113.00  from holding Yanzhou Coal Mining or generate 11.69% 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.  Unity Software

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 unsteady 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.

Unity Software

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Unity Software are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Unity Software reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Yanzhou Coal and Unity Software

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

The idea behind Yanzhou Coal Mining and Unity Software 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.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.