Correlation Between Yanzhou Coal and Ping An

Can any of the company-specific risk be diversified away by investing in both Yanzhou Coal and Ping An 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 Ping An 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 Ping An Insurance, you can compare the effects of market volatilities on Yanzhou Coal and Ping An 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 Ping An. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yanzhou Coal and Ping An.

Diversification Opportunities for Yanzhou Coal and Ping An

0.62

Correlation Coefficient

Yanzhou Coal  Ping An

Poor diversification

The 3 months correlation between Yanzhou and Ping is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Yanzhou Coal Mining and Ping An Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ping An Insurance 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 Ping An. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ping An Insurance has no effect on the direction of Yanzhou Coal i.e., Yanzhou Coal and Ping An go up and down completely randomly.

Pair Corralation between Yanzhou Coal and Ping An

Assuming the 90 days horizon Yanzhou Coal Mining is expected to under-perform the Ping An. But the stock apears to be less risky and, when comparing its historical volatility, Yanzhou Coal Mining is 1.16 times less risky than Ping An. The stock trades about -0.08 of its potential returns per unit of risk. The Ping An Insurance is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  535.00  in Ping An Insurance on September 25, 2024 and sell it today you would earn a total of  33.00  from holding Ping An Insurance or generate 6.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Yanzhou Coal Mining  vs.  Ping An Insurance

Yanzhou Coal Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yanzhou Coal Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Yanzhou Coal is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Ping An Insurance

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ping An Insurance are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Ping An unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Yanzhou Coal and Ping An

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

The idea behind Yanzhou Coal Mining and Ping An Insurance 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.