Correlation Between Yanzhou Coal and Whitehaven Coal
Can any of the company-specific risk be diversified away by investing in both Yanzhou Coal 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 Yanzhou Coal and Whitehaven Coal 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 Whitehaven Coal Limited, you can compare the effects of market volatilities on Yanzhou Coal 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 Yanzhou Coal with a short position of Whitehaven Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yanzhou Coal and Whitehaven Coal.
Diversification Opportunities for Yanzhou Coal and Whitehaven Coal
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Yanzhou and Whitehaven is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Yanzhou Coal Mining and Whitehaven Coal Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitehaven Coal 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 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 Yanzhou Coal i.e., Yanzhou Coal and Whitehaven Coal go up and down completely randomly.
Pair Corralation between Yanzhou Coal and Whitehaven Coal
Assuming the 90 days trading horizon Yanzhou Coal Mining is expected to under-perform the Whitehaven Coal. In addition to that, Yanzhou Coal is 1.19 times more volatile than Whitehaven Coal Limited. It trades about -0.23 of its total potential returns per unit of risk. Whitehaven Coal Limited is currently generating about -0.05 per unit of volatility. If you would invest 402.00 in Whitehaven Coal Limited on September 5, 2024 and sell it today you would lose (9.00) from holding Whitehaven Coal Limited or give up 2.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yanzhou Coal Mining vs. Whitehaven Coal Limited
Performance |
| Timeline |
| Yanzhou Coal Mining |
| Whitehaven Coal |
Yanzhou Coal and Whitehaven Coal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yanzhou Coal and Whitehaven Coal
The main advantage of trading using opposite Yanzhou Coal and Whitehaven Coal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yanzhou Coal 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.| Yanzhou Coal vs. PT Bayan Resources | Yanzhou Coal vs. Yanzhou Coal Mining | Yanzhou Coal vs. PT Adaro Energy | Yanzhou Coal vs. PT Bumi Resources |
| Whitehaven Coal vs. PT Bayan Resources | Whitehaven Coal vs. Yanzhou Coal Mining | Whitehaven Coal vs. Yanzhou Coal Mining | Whitehaven Coal vs. PT Adaro Energy |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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