Correlation Between Farmers Merchants and Yanzhou Coal
Can any of the company-specific risk be diversified away by investing in both Farmers Merchants 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 Farmers Merchants and Yanzhou Coal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Farmers Merchants Bancorp and Yanzhou Coal Mining, you can compare the effects of market volatilities on Farmers Merchants 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 Farmers Merchants with a short position of Yanzhou Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmers Merchants and Yanzhou Coal.
Diversification Opportunities for Farmers Merchants and Yanzhou Coal
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Farmers and Yanzhou is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Farmers Merchants Bancorp 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 Farmers Merchants 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 Farmers Merchants Bancorp 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 Farmers Merchants i.e., Farmers Merchants and Yanzhou Coal go up and down completely randomly.
Pair Corralation between Farmers Merchants and Yanzhou Coal
Given the investment horizon of 90 days Farmers Merchants Bancorp is expected to generate 0.91 times more return on investment than Yanzhou Coal. However, Farmers Merchants Bancorp is 1.1 times less risky than Yanzhou Coal. It trades about -0.01 of its potential returns per unit of risk. Yanzhou Coal Mining is currently generating about -0.12 per unit of risk. If you would invest 103,500 in Farmers Merchants Bancorp on November 27, 2024 and sell it today you would lose (500.00) from holding Farmers Merchants Bancorp or give up 0.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Farmers Merchants Bancorp vs. Yanzhou Coal Mining
Performance |
| Timeline |
| Farmers Merchants Bancorp |
| Yanzhou Coal Mining |
Farmers Merchants and Yanzhou Coal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farmers Merchants and Yanzhou Coal
The main advantage of trading using opposite Farmers Merchants and Yanzhou Coal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farmers Merchants 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.| Farmers Merchants vs. PSB Holdings | Farmers Merchants vs. Eagle Financial Services | Farmers Merchants vs. National Capital Bank | Farmers Merchants vs. Community Heritage Financial |
| Yanzhou Coal vs. Indo Tambangraya Megah | Yanzhou Coal vs. Bukit Asam Tbk | Yanzhou Coal vs. Geo Energy Resources | Yanzhou Coal vs. Yancoal Australia |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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