Correlation Between Ichor Coal and Yancoal Australia

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

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

Diversification Opportunities for Ichor Coal and Yancoal Australia

-0.02

Correlation Coefficient

Ichor Coal  Yancoal Australia

Good diversification

The 3 months correlation between Ichor and Yancoal is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Ichor Coal NV and Yancoal Australia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yancoal Australia and Ichor 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 Ichor Coal NV 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 Ichor Coal i.e., Ichor Coal and Yancoal Australia go up and down completely randomly.

Pair Corralation between Ichor Coal and Yancoal Australia

Assuming the 90 days trading horizon Ichor Coal NV is expected to under-perform the Yancoal Australia. But the stock apears to be less risky and, when comparing its historical volatility, Ichor Coal NV is 1.11 times less risky than Yancoal Australia. The stock trades about -0.22 of its potential returns per unit of risk. The Yancoal Australia is currently generating about -0.17 of returns per unit of risk over similar time horizon. If you would invest  404.00  in Yancoal Australia on September 23, 2024 and sell it today you would lose (34.00) from holding Yancoal Australia or give up 8.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.91%
Values	Daily Returns

Ichor Coal NV  vs.  Yancoal Australia

Ichor Coal NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ichor Coal NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Yancoal Australia

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Yancoal Australia are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Yancoal Australia may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ichor Coal and Yancoal Australia

The main advantage of trading using opposite Ichor Coal and Yancoal Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ichor Coal 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 Ichor Coal NV 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.