Correlation Between New HopeLtd and Yanzhou Coal
Can any of the company-specific risk be diversified away by investing in both New HopeLtd 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 New HopeLtd and Yanzhou Coal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Hope and Yanzhou Coal Mining, you can compare the effects of market volatilities on New HopeLtd 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 New HopeLtd with a short position of Yanzhou Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of New HopeLtd and Yanzhou Coal.
Diversification Opportunities for New HopeLtd and Yanzhou Coal
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between New and Yanzhou is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding New Hope 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 New HopeLtd 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 New Hope 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 New HopeLtd i.e., New HopeLtd and Yanzhou Coal go up and down completely randomly.
Pair Corralation between New HopeLtd and Yanzhou Coal
Assuming the 90 days horizon New Hope is expected to under-perform the Yanzhou Coal. In addition to that, New HopeLtd is 12.3 times more volatile than Yanzhou Coal Mining. It trades about -0.16 of its total potential returns per unit of risk. Yanzhou Coal Mining is currently generating about -0.22 per unit of volatility. If you would invest 136.00 in Yanzhou Coal Mining on September 2, 2024 and sell it today you would lose (1.00) from holding Yanzhou Coal Mining or give up 0.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Hope vs. Yanzhou Coal Mining
Performance |
| Timeline |
| New HopeLtd |
| Yanzhou Coal Mining |
New HopeLtd and Yanzhou Coal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New HopeLtd and Yanzhou Coal
The main advantage of trading using opposite New HopeLtd and Yanzhou Coal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New HopeLtd 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.| New HopeLtd vs. Whitehaven Coal Limited | New HopeLtd vs. Adaro Energy Tbk | New HopeLtd vs. Thungela Resources Limited | New HopeLtd vs. Yanzhou Coal Mining |
| Yanzhou Coal vs. Geo Energy Resources | Yanzhou Coal vs. Indo Tambangraya Megah | Yanzhou Coal vs. Bukit Asam Tbk | Yanzhou Coal vs. Thungela Resources Limited |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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