Correlation Between Yanzhou Coal and Thungela Resources
Can any of the company-specific risk be diversified away by investing in both Yanzhou Coal and Thungela Resources 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 Thungela Resources 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 Thungela Resources Limited, you can compare the effects of market volatilities on Yanzhou Coal and Thungela Resources 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 Thungela Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yanzhou Coal and Thungela Resources.
Diversification Opportunities for Yanzhou Coal and Thungela Resources
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Yanzhou and Thungela is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Yanzhou Coal Mining and Thungela Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thungela Resources 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 Thungela Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thungela Resources has no effect on the direction of Yanzhou Coal i.e., Yanzhou Coal and Thungela Resources go up and down completely randomly.
Pair Corralation between Yanzhou Coal and Thungela Resources
Assuming the 90 days horizon Yanzhou Coal Mining is expected to generate 1.61 times more return on investment than Thungela Resources. However, Yanzhou Coal is 1.61 times more volatile than Thungela Resources Limited. It trades about 0.03 of its potential returns per unit of risk. Thungela Resources Limited is currently generating about 0.03 per unit of risk. If you would invest 1,074 in Yanzhou Coal Mining on August 31, 2024 and sell it today you would earn a total of 96.00 from holding Yanzhou Coal Mining or generate 8.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.87% |
| Values | Daily Returns |
Yanzhou Coal Mining vs. Thungela Resources Limited
Performance |
| Timeline |
| Yanzhou Coal Mining |
| Thungela Resources |
Yanzhou Coal and Thungela Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yanzhou Coal and Thungela Resources
The main advantage of trading using opposite Yanzhou Coal and Thungela Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yanzhou Coal position performs unexpectedly, Thungela Resources 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 Thungela Resources will offset losses from the drop in Thungela Resources' 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 |
| Thungela Resources vs. Adaro Energy Tbk | Thungela Resources vs. Geo Energy Resources | Thungela Resources vs. Bukit Asam Tbk | Thungela Resources vs. New Hope |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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