Correlation Between Yanzhou Coal and Cal Maine
Can any of the company-specific risk be diversified away by investing in both Yanzhou Coal and Cal Maine 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 Yanzhou Coal and Cal Maine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yanzhou Coal Mining and Cal Maine Foods, you can compare the effects of market volatilities on Yanzhou Coal and Cal Maine 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 Yanzhou Coal with a short position of Cal Maine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yanzhou Coal and Cal Maine.
Diversification Opportunities for Yanzhou Coal and Cal Maine
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Yanzhou and Cal is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Yanzhou Coal Mining and Cal Maine Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cal Maine Foods and Yanzhou Coal 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 Yanzhou Coal Mining are associated (or correlated) with Cal Maine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cal Maine Foods has no effect on the direction of Yanzhou Coal i.e., Yanzhou Coal and Cal Maine go up and down completely randomly.
Pair Corralation between Yanzhou Coal and Cal Maine
Assuming the 90 days horizon Yanzhou Coal Mining is expected to under-perform the Cal Maine. But the stock apears to be less risky and, when comparing its historical volatility, Yanzhou Coal Mining is 1.77 times less risky than Cal Maine. The stock trades about -0.15 of its potential returns per unit of risk. The Cal Maine Foods is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 9,846 in Cal Maine Foods on November 8, 2024 and sell it today you would earn a total of 534.00 from holding Cal Maine Foods or generate 5.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yanzhou Coal Mining vs. Cal Maine Foods
Performance |
| Timeline |
| Yanzhou Coal Mining |
| Cal Maine Foods |
Yanzhou Coal and Cal Maine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yanzhou Coal and Cal Maine
The main advantage of trading using opposite Yanzhou Coal and Cal Maine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yanzhou Coal position performs unexpectedly, Cal Maine 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 Cal Maine will offset losses from the drop in Cal Maine's long position.| Yanzhou Coal vs. CHRYSALIS INVESTMENTS LTD | Yanzhou Coal vs. HK Electric Investments | Yanzhou Coal vs. EITZEN CHEMICALS | Yanzhou Coal vs. Eastman Chemical |
| Cal Maine vs. DAIDO METAL TD | Cal Maine vs. China Railway Construction | Cal Maine vs. Dairy Farm International | Cal Maine vs. SIERRA METALS |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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