Correlation Between Arrow Electronics and Yanzhou Coal
Can any of the company-specific risk be diversified away by investing in both Arrow Electronics and Yanzhou Coal 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 Arrow Electronics and Yanzhou Coal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arrow Electronics and Yanzhou Coal Mining, you can compare the effects of market volatilities on Arrow Electronics and Yanzhou Coal 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 Arrow Electronics with a short position of Yanzhou Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Electronics and Yanzhou Coal.
Diversification Opportunities for Arrow Electronics and Yanzhou Coal
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Arrow and Yanzhou is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Electronics and Yanzhou Coal Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yanzhou Coal Mining and Arrow Electronics 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 Arrow Electronics are associated (or correlated) with Yanzhou Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yanzhou Coal Mining has no effect on the direction of Arrow Electronics i.e., Arrow Electronics and Yanzhou Coal go up and down completely randomly.
Pair Corralation between Arrow Electronics and Yanzhou Coal
Assuming the 90 days horizon Arrow Electronics is expected to generate 0.51 times more return on investment than Yanzhou Coal. However, Arrow Electronics is 1.95 times less risky than Yanzhou Coal. It trades about -0.24 of its potential returns per unit of risk. Yanzhou Coal Mining is currently generating about -0.34 per unit of risk. If you would invest 11,400 in Arrow Electronics on October 14, 2024 and sell it today you would lose (500.00) from holding Arrow Electronics or give up 4.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arrow Electronics vs. Yanzhou Coal Mining
Performance |
| Timeline |
| Arrow Electronics |
| Yanzhou Coal Mining |
Arrow Electronics and Yanzhou Coal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arrow Electronics and Yanzhou Coal
The main advantage of trading using opposite Arrow Electronics and Yanzhou Coal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Electronics position performs unexpectedly, Yanzhou Coal 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 Yanzhou Coal will offset losses from the drop in Yanzhou Coal's long position.| Arrow Electronics vs. DAIDO METAL TD | Arrow Electronics vs. BE Semiconductor Industries | Arrow Electronics vs. Nordic Semiconductor ASA | Arrow Electronics vs. SIERRA METALS |
| Yanzhou Coal vs. Richardson Electronics | Yanzhou Coal vs. Arrow Electronics | Yanzhou Coal vs. AOI Electronics Co | Yanzhou Coal vs. LPKF Laser Electronics |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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