Correlation Between Yanzhou Coal and Volkswagen
Can any of the company-specific risk be diversified away by investing in both Yanzhou Coal and Volkswagen 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 Volkswagen 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 Volkswagen AG, you can compare the effects of market volatilities on Yanzhou Coal and Volkswagen 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 Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yanzhou Coal and Volkswagen.
Diversification Opportunities for Yanzhou Coal and Volkswagen
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Yanzhou and Volkswagen is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Yanzhou Coal Mining and Volkswagen AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG 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 Volkswagen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volkswagen AG has no effect on the direction of Yanzhou Coal i.e., Yanzhou Coal and Volkswagen go up and down completely randomly.
Pair Corralation between Yanzhou Coal and Volkswagen
Assuming the 90 days horizon Yanzhou Coal Mining is expected to under-perform the Volkswagen. In addition to that, Yanzhou Coal is 1.29 times more volatile than Volkswagen AG. It trades about -0.2 of its total potential returns per unit of risk. Volkswagen AG is currently generating about 0.44 per unit of volatility. If you would invest 9,160 in Volkswagen AG on October 30, 2024 and sell it today you would earn a total of 1,050 from holding Volkswagen AG or generate 11.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yanzhou Coal Mining vs. Volkswagen AG
Performance |
| Timeline |
| Yanzhou Coal Mining |
| Volkswagen AG |
Yanzhou Coal and Volkswagen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yanzhou Coal and Volkswagen
The main advantage of trading using opposite Yanzhou Coal and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yanzhou Coal position performs unexpectedly, Volkswagen 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 Volkswagen will offset losses from the drop in Volkswagen's long position.| Yanzhou Coal vs. ONWARD MEDICAL BV | Yanzhou Coal vs. MICRONIC MYDATA | Yanzhou Coal vs. CVR Medical Corp | Yanzhou Coal vs. PULSION Medical Systems |
| Volkswagen vs. MGIC INVESTMENT | Volkswagen vs. PennantPark Investment | Volkswagen vs. SEI INVESTMENTS | Volkswagen vs. Guangdong Investment 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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