Correlation Between Bukit Asam and Yanzhou Coal
Can any of the company-specific risk be diversified away by investing in both Bukit Asam 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 Bukit Asam and Yanzhou Coal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bukit Asam Tbk and Yanzhou Coal Mining, you can compare the effects of market volatilities on Bukit Asam 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 Bukit Asam with a short position of Yanzhou Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bukit Asam and Yanzhou Coal.
Diversification Opportunities for Bukit Asam and Yanzhou Coal
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bukit and Yanzhou is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Bukit Asam Tbk 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 Bukit Asam 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 Bukit Asam Tbk 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 Bukit Asam i.e., Bukit Asam and Yanzhou Coal go up and down completely randomly.
Pair Corralation between Bukit Asam and Yanzhou Coal
Assuming the 90 days horizon Bukit Asam Tbk is expected to generate 1.17 times more return on investment than Yanzhou Coal. However, Bukit Asam is 1.17 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 0.07 per unit of risk. If you would invest 292.00 in Bukit Asam Tbk on August 30, 2024 and sell it today you would earn a total of 177.00 from holding Bukit Asam Tbk or generate 60.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 79.79% |
| Values | Daily Returns |
Bukit Asam Tbk vs. Yanzhou Coal Mining
Performance |
| Timeline |
| Bukit Asam Tbk |
| Yanzhou Coal Mining |
Bukit Asam and Yanzhou Coal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bukit Asam and Yanzhou Coal
The main advantage of trading using opposite Bukit Asam and Yanzhou Coal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bukit Asam 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.| Bukit Asam vs. LB Foster | Bukit Asam vs. Getty Realty | Bukit Asam vs. Simon Property Group | Bukit Asam vs. SunOpta |
| Yanzhou Coal vs. Yamaha Motor Co | Yanzhou Coal vs. Nitto Denko Corp | Yanzhou Coal vs. Farmers Merchants Bancorp | Yanzhou Coal vs. Furukawa Electric Co |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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