Correlation Between Aneka Tambang and Yancoal Australia

Can any of the company-specific risk be diversified away by investing in both Aneka Tambang and Yancoal Australia 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 Aneka Tambang and Yancoal Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aneka Tambang Tbk and Yancoal Australia, you can compare the effects of market volatilities on Aneka Tambang and Yancoal Australia 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 Aneka Tambang with a short position of Yancoal Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aneka Tambang and Yancoal Australia.

Diversification Opportunities for Aneka Tambang and Yancoal Australia

-0.55

Correlation Coefficient

Aneka Tambang  Yancoal Australia

Excellent diversification

The 3 months correlation between Aneka and Yancoal is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Aneka Tambang Tbk and Yancoal Australia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yancoal Australia and Aneka Tambang 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 Aneka Tambang Tbk are associated (or correlated) with Yancoal Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yancoal Australia has no effect on the direction of Aneka Tambang i.e., Aneka Tambang and Yancoal Australia go up and down completely randomly.

Pair Corralation between Aneka Tambang and Yancoal Australia

Assuming the 90 days trading horizon Aneka Tambang Tbk is expected to under-perform the Yancoal Australia. In addition to that, Aneka Tambang is 1.29 times more volatile than Yancoal Australia. It trades about -0.05 of its total potential returns per unit of risk. Yancoal Australia is currently generating about 0.1 per unit of volatility. If you would invest  563.00  in Yancoal Australia on September 23, 2024 and sell it today you would earn a total of  63.00  from holding Yancoal Australia or generate 11.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Aneka Tambang Tbk  vs.  Yancoal Australia

Aneka Tambang Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aneka Tambang Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Yancoal Australia

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Yancoal Australia are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Yancoal Australia may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Aneka Tambang and Yancoal Australia

The main advantage of trading using opposite Aneka Tambang and Yancoal Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aneka Tambang position performs unexpectedly, Yancoal Australia 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 Yancoal Australia will offset losses from the drop in Yancoal Australia's long position.

The idea behind Aneka Tambang Tbk and Yancoal Australia pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.