Correlation Between Geo Energy and Yanzhou Coal
Can any of the company-specific risk be diversified away by investing in both Geo Energy 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 Geo Energy and Yanzhou Coal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Geo Energy Resources and Yanzhou Coal Mining, you can compare the effects of market volatilities on Geo Energy 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 Geo Energy with a short position of Yanzhou Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Geo Energy and Yanzhou Coal.
Diversification Opportunities for Geo Energy and Yanzhou Coal
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Geo and Yanzhou is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Geo Energy Resources 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 Geo Energy 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 Geo Energy Resources 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 Geo Energy i.e., Geo Energy and Yanzhou Coal go up and down completely randomly.
Pair Corralation between Geo Energy and Yanzhou Coal
Assuming the 90 days horizon Geo Energy Resources is expected to under-perform the Yanzhou Coal. In addition to that, Geo Energy is 1.51 times more volatile than Yanzhou Coal Mining. It trades about -0.21 of its total potential returns per unit of risk. Yanzhou Coal Mining is currently generating about -0.25 per unit of volatility. If you would invest 1,332 in Yanzhou Coal Mining on August 26, 2024 and sell it today you would lose (144.00) from holding Yanzhou Coal Mining or give up 10.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Geo Energy Resources vs. Yanzhou Coal Mining
Performance |
| Timeline |
| Geo Energy Resources |
| Yanzhou Coal Mining |
Geo Energy and Yanzhou Coal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Geo Energy and Yanzhou Coal
The main advantage of trading using opposite Geo Energy and Yanzhou Coal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Geo Energy 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.| Geo Energy vs. Morien Resources Corp | Geo Energy vs. Alliance Resource Partners | Geo Energy vs. Astera Labs, Common | Geo Energy vs. Autodesk |
| 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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