Correlation Between Yanzhou Coal and China Shenhua
Can any of the company-specific risk be diversified away by investing in both Yanzhou Coal and China Shenhua 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 China Shenhua 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 China Shenhua Energy, you can compare the effects of market volatilities on Yanzhou Coal and China Shenhua 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 China Shenhua. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yanzhou Coal and China Shenhua.
Diversification Opportunities for Yanzhou Coal and China Shenhua
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Yanzhou and China is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Yanzhou Coal Mining and China Shenhua Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Shenhua Energy 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 China Shenhua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Shenhua Energy has no effect on the direction of Yanzhou Coal i.e., Yanzhou Coal and China Shenhua go up and down completely randomly.
Pair Corralation between Yanzhou Coal and China Shenhua
Assuming the 90 days horizon Yanzhou Coal Mining is expected to generate 11.51 times more return on investment than China Shenhua. However, Yanzhou Coal is 11.51 times more volatile than China Shenhua Energy. It trades about 0.07 of its potential returns per unit of risk. China Shenhua Energy is currently generating about 0.07 per unit of risk. If you would invest 1,161 in Yanzhou Coal Mining on August 26, 2024 and sell it today you would earn a total of 27.00 from holding Yanzhou Coal Mining or generate 2.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.81% |
| Values | Daily Returns |
Yanzhou Coal Mining vs. China Shenhua Energy
Performance |
| Timeline |
| Yanzhou Coal Mining |
| China Shenhua Energy |
Yanzhou Coal and China Shenhua Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yanzhou Coal and China Shenhua
The main advantage of trading using opposite Yanzhou Coal and China Shenhua positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yanzhou Coal position performs unexpectedly, China Shenhua 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 China Shenhua will offset losses from the drop in China Shenhua's long position.| Yanzhou Coal vs. Indo Tambangraya Megah | Yanzhou Coal vs. Bukit Asam Tbk | Yanzhou Coal vs. Geo Energy Resources | Yanzhou Coal vs. Yancoal Australia |
| China Shenhua vs. Morien Resources Corp | China Shenhua vs. Alliance Resource Partners | China Shenhua vs. Astera Labs, Common | China Shenhua vs. Autodesk |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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