Correlation Between Barnes and Yanzhou Coal
Can any of the company-specific risk be diversified away by investing in both Barnes 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 Barnes and Yanzhou Coal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barnes Group and Yanzhou Coal Mining, you can compare the effects of market volatilities on Barnes 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 Barnes with a short position of Yanzhou Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barnes and Yanzhou Coal.
Diversification Opportunities for Barnes and Yanzhou Coal
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Barnes and Yanzhou is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Barnes Group 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 Barnes 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 Barnes Group 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 Barnes i.e., Barnes and Yanzhou Coal go up and down completely randomly.
Pair Corralation between Barnes and Yanzhou Coal
Taking into account the 90-day investment horizon Barnes Group is expected to generate 0.64 times more return on investment than Yanzhou Coal. However, Barnes Group is 1.55 times less risky than Yanzhou Coal. It trades about 0.08 of its potential returns per unit of risk. Yanzhou Coal Mining is currently generating about -0.21 per unit of risk. If you would invest 4,678 in Barnes Group on August 31, 2024 and sell it today you would earn a total of 8.00 from holding Barnes Group or generate 0.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barnes Group vs. Yanzhou Coal Mining
Performance |
| Timeline |
| Barnes Group |
| Yanzhou Coal Mining |
Barnes and Yanzhou Coal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barnes and Yanzhou Coal
The main advantage of trading using opposite Barnes and Yanzhou Coal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barnes 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.| Barnes vs. Helios Technologies | Barnes vs. Enpro Industries | Barnes vs. Omega Flex | Barnes vs. Luxfer Holdings PLC |
| Yanzhou Coal vs. Indo Tambangraya Megah | Yanzhou Coal vs. Adaro Energy Tbk | Yanzhou Coal vs. Thungela Resources Limited | Yanzhou Coal vs. China Coal Energy |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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