Correlation Between Yancoal Australia and PT Adaro
Can any of the company-specific risk be diversified away by investing in both Yancoal Australia and PT Adaro 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 Yancoal Australia and PT Adaro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yancoal Australia and PT Adaro Energy, you can compare the effects of market volatilities on Yancoal Australia and PT Adaro 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 Yancoal Australia with a short position of PT Adaro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yancoal Australia and PT Adaro.
Diversification Opportunities for Yancoal Australia and PT Adaro
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Yancoal and A64 is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Yancoal Australia and PT Adaro Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Adaro Energy and Yancoal Australia 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 Yancoal Australia are associated (or correlated) with PT Adaro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Adaro Energy has no effect on the direction of Yancoal Australia i.e., Yancoal Australia and PT Adaro go up and down completely randomly.
Pair Corralation between Yancoal Australia and PT Adaro
Assuming the 90 days horizon Yancoal Australia is expected to generate 0.62 times more return on investment than PT Adaro. However, Yancoal Australia is 1.61 times less risky than PT Adaro. It trades about 0.06 of its potential returns per unit of risk. PT Adaro Energy is currently generating about 0.02 per unit of risk. If you would invest 266.00 in Yancoal Australia on September 5, 2024 and sell it today you would earn a total of 106.00 from holding Yancoal Australia or generate 39.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yancoal Australia vs. PT Adaro Energy
Performance |
| Timeline |
| Yancoal Australia |
| PT Adaro Energy |
Yancoal Australia and PT Adaro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yancoal Australia and PT Adaro
The main advantage of trading using opposite Yancoal Australia and PT Adaro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yancoal Australia position performs unexpectedly, PT Adaro 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 PT Adaro will offset losses from the drop in PT Adaro's long position.| Yancoal Australia vs. BORR DRILLING NEW | Yancoal Australia vs. Columbia Sportswear | Yancoal Australia vs. CN MODERN DAIRY | Yancoal Australia vs. AWILCO DRILLING PLC |
| PT Adaro vs. PT Bayan Resources | PT Adaro vs. Yanzhou Coal Mining | PT Adaro vs. Yanzhou Coal Mining | PT Adaro vs. Whitehaven Coal 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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