Correlation Between Yancoal Australia and Whitehaven Coal
Can any of the company-specific risk be diversified away by investing in both Yancoal Australia and Whitehaven 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 Yancoal Australia and Whitehaven Coal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yancoal Australia and Whitehaven Coal Limited, you can compare the effects of market volatilities on Yancoal Australia and Whitehaven 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 Yancoal Australia with a short position of Whitehaven Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yancoal Australia and Whitehaven Coal.
Diversification Opportunities for Yancoal Australia and Whitehaven Coal
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Yancoal and Whitehaven is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Yancoal Australia and Whitehaven Coal Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitehaven Coal 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 Whitehaven Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whitehaven Coal has no effect on the direction of Yancoal Australia i.e., Yancoal Australia and Whitehaven Coal go up and down completely randomly.
Pair Corralation between Yancoal Australia and Whitehaven Coal
Assuming the 90 days horizon Yancoal Australia is expected to generate 1.37 times more return on investment than Whitehaven Coal. However, Yancoal Australia is 1.37 times more volatile than Whitehaven Coal Limited. It trades about 0.09 of its potential returns per unit of risk. Whitehaven Coal Limited is currently generating about 0.03 per unit of risk. If you would invest 328.00 in Yancoal Australia on September 3, 2024 and sell it today you would earn a total of 58.00 from holding Yancoal Australia or generate 17.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yancoal Australia vs. Whitehaven Coal Limited
Performance |
| Timeline |
| Yancoal Australia |
| Whitehaven Coal |
Yancoal Australia and Whitehaven Coal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yancoal Australia and Whitehaven Coal
The main advantage of trading using opposite Yancoal Australia and Whitehaven Coal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yancoal Australia position performs unexpectedly, Whitehaven 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 Whitehaven Coal will offset losses from the drop in Whitehaven Coal's long position.| Yancoal Australia vs. STORE ELECTRONIC | Yancoal Australia vs. American Public Education | Yancoal Australia vs. EMBARK EDUCATION LTD | Yancoal Australia vs. DEVRY EDUCATION GRP |
| Whitehaven Coal vs. Zoom Video Communications | Whitehaven Coal vs. Chunghwa Telecom Co | Whitehaven Coal vs. National Retail Properties | Whitehaven Coal vs. PICKN PAY STORES |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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