Correlation Between Yancoal Australia and Regal Funds

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

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

Diversification Opportunities for Yancoal Australia and Regal Funds

0.11

Correlation Coefficient

Yancoal Australia  Regal Funds

Average diversification

The 3 months correlation between Yancoal and Regal is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Yancoal Australia and Regal Funds Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regal Funds Management and Yancoal Australia 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 Yancoal Australia are associated (or correlated) with Regal Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regal Funds Management has no effect on the direction of Yancoal Australia i.e., Yancoal Australia and Regal Funds go up and down completely randomly.

Pair Corralation between Yancoal Australia and Regal Funds

Assuming the 90 days trading horizon Yancoal Australia is expected to generate 0.89 times more return on investment than Regal Funds. However, Yancoal Australia is 1.13 times less risky than Regal Funds. It trades about 0.04 of its potential returns per unit of risk. Regal Funds Management is currently generating about 0.02 per unit of risk. If you would invest  458.00  in Yancoal Australia on September 26, 2024 and sell it today you would earn a total of  184.00  from holding Yancoal Australia or generate 40.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Yancoal Australia  vs.  Regal Funds Management

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 weak essential indicators, Yancoal Australia may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Regal Funds Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Regal Funds Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Regal Funds is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Yancoal Australia and Regal Funds

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

The idea behind Yancoal Australia and Regal Funds Management 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.