Correlation Between IND+COMMBK CHINA and Yancoal Australia

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

By analyzing existing cross correlation between INDCOMMBK CHINA ADR20 and Yancoal Australia, you can compare the effects of market volatilities on IND+COMMBK CHINA 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 IND+COMMBK CHINA with a short position of Yancoal Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of IND+COMMBK CHINA and Yancoal Australia.

Diversification Opportunities for IND+COMMBK CHINA and Yancoal Australia

0.91

Correlation Coefficient

IND+COMMBK CHINA  Yancoal Australia

Almost no diversification

The 3 months correlation between IND+COMMBK and Yancoal is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding INDCOMMBK CHINA ADR20 and Yancoal Australia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yancoal Australia and IND+COMMBK CHINA 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 INDCOMMBK CHINA ADR20 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 IND+COMMBK CHINA i.e., IND+COMMBK CHINA and Yancoal Australia go up and down completely randomly.

Pair Corralation between IND+COMMBK CHINA and Yancoal Australia

Assuming the 90 days trading horizon IND+COMMBK CHINA is expected to generate 1.65 times less return on investment than Yancoal Australia. But when comparing it to its historical volatility, INDCOMMBK CHINA ADR20 is 1.38 times less risky than Yancoal Australia. It trades about 0.1 of its potential returns per unit of risk. Yancoal Australia is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  272.00  in Yancoal Australia on April 23, 2025 and sell it today you would earn a total of  61.00  from holding Yancoal Australia or generate 22.43% return on investment over 90 days.

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

INDCOMMBK CHINA ADR20  vs.  Yancoal Australia

INDCOMMBK CHINA ADR20

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in INDCOMMBK CHINA ADR20 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady forward-looking signals, IND+COMMBK CHINA reported solid returns over the last few months and may actually be approaching a breakup point.

Yancoal Australia

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Yancoal Australia are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Yancoal Australia reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IND+COMMBK CHINA and Yancoal Australia

The main advantage of trading using opposite IND+COMMBK CHINA and Yancoal Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IND+COMMBK CHINA 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 INDCOMMBK CHINA ADR20 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.