Correlation Between Martin Marietta and Yanzhou Coal
Can any of the company-specific risk be diversified away by investing in both Martin Marietta 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 Martin Marietta and Yanzhou Coal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Martin Marietta Materials and Yanzhou Coal Mining, you can compare the effects of market volatilities on Martin Marietta 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 Martin Marietta with a short position of Yanzhou Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and Yanzhou Coal.
Diversification Opportunities for Martin Marietta and Yanzhou Coal
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Martin and Yanzhou is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials 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 Martin Marietta 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 Martin Marietta Materials 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 Martin Marietta i.e., Martin Marietta and Yanzhou Coal go up and down completely randomly.
Pair Corralation between Martin Marietta and Yanzhou Coal
Assuming the 90 days trading horizon Martin Marietta Materials is expected to generate 0.39 times more return on investment than Yanzhou Coal. However, Martin Marietta Materials is 2.53 times less risky than Yanzhou Coal. 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 31,318 in Martin Marietta Materials on October 13, 2024 and sell it today you would earn a total of 18,352 from holding Martin Marietta Materials or generate 58.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Martin Marietta Materials vs. Yanzhou Coal Mining
Performance |
| Timeline |
| Martin Marietta Materials |
| Yanzhou Coal Mining |
Martin Marietta and Yanzhou Coal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martin Marietta and Yanzhou Coal
The main advantage of trading using opposite Martin Marietta and Yanzhou Coal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta 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.| Martin Marietta vs. GigaMedia | Martin Marietta vs. Flutter Entertainment PLC | Martin Marietta vs. THRACE PLASTICS | Martin Marietta vs. Materialise NV |
| Yanzhou Coal vs. Sumitomo Rubber Industries | Yanzhou Coal vs. De Grey Mining | Yanzhou Coal vs. NEWELL RUBBERMAID | Yanzhou Coal vs. Martin Marietta Materials |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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