Correlation Between Diageo Plc and Yanzhou Coal
Can any of the company-specific risk be diversified away by investing in both Diageo Plc 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 Diageo Plc and Yanzhou Coal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diageo plc and Yanzhou Coal Mining, you can compare the effects of market volatilities on Diageo Plc 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 Diageo Plc with a short position of Yanzhou Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diageo Plc and Yanzhou Coal.
Diversification Opportunities for Diageo Plc and Yanzhou Coal
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Diageo and Yanzhou is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Diageo plc 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 Diageo Plc 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 Diageo plc 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 Diageo Plc i.e., Diageo Plc and Yanzhou Coal go up and down completely randomly.
Pair Corralation between Diageo Plc and Yanzhou Coal
Assuming the 90 days trading horizon Diageo plc is expected to generate 1.19 times more return on investment than Yanzhou Coal. However, Diageo Plc is 1.19 times more volatile than Yanzhou Coal Mining. It trades about -0.1 of its potential returns per unit of risk. Yanzhou Coal Mining is currently generating about -0.33 per unit of risk. If you would invest 12,000 in Diageo plc on October 25, 2024 and sell it today you would lose (500.00) from holding Diageo plc or give up 4.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diageo plc vs. Yanzhou Coal Mining
Performance |
| Timeline |
| Diageo plc |
| Yanzhou Coal Mining |
Diageo Plc and Yanzhou Coal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diageo Plc and Yanzhou Coal
The main advantage of trading using opposite Diageo Plc and Yanzhou Coal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diageo Plc 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.| Diageo Plc vs. GREENX METALS LTD | Diageo Plc vs. Forsys Metals Corp | Diageo Plc vs. FIREWEED METALS P | Diageo Plc vs. Calibre Mining Corp |
| Yanzhou Coal vs. Geely Automobile Holdings | Yanzhou Coal vs. Direct Line Insurance | Yanzhou Coal vs. NAKED WINES PLC | Yanzhou Coal vs. BANK OF CHINA |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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