Correlation Between Transport International and Yanzhou Coal
Can any of the company-specific risk be diversified away by investing in both Transport International 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 Transport International and Yanzhou Coal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transport International Holdings and Yanzhou Coal Mining, you can compare the effects of market volatilities on Transport International 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 Transport International with a short position of Yanzhou Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transport International and Yanzhou Coal.
Diversification Opportunities for Transport International and Yanzhou Coal
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Transport and Yanzhou is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Transport International Holdin 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 Transport International 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 Transport International Holdings 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 Transport International i.e., Transport International and Yanzhou Coal go up and down completely randomly.
Pair Corralation between Transport International and Yanzhou Coal
Assuming the 90 days horizon Transport International Holdings is expected to generate 1.32 times more return on investment than Yanzhou Coal. However, Transport International is 1.32 times more volatile than Yanzhou Coal Mining. It trades about 0.07 of its potential returns per unit of risk. Yanzhou Coal Mining is currently generating about 0.02 per unit of risk. If you would invest 28.00 in Transport International Holdings on December 13, 2024 and sell it today you would earn a total of 67.00 from holding Transport International Holdings or generate 239.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transport International Holdin vs. Yanzhou Coal Mining
Performance |
| Timeline |
| Transport International |
| Yanzhou Coal Mining |
Transport International and Yanzhou Coal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transport International and Yanzhou Coal
The main advantage of trading using opposite Transport International and Yanzhou Coal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transport International 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.| Transport International vs. BW OFFSHORE LTD | ||
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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