Correlation Between Natural Resource and Yanzhou Coal

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

By analyzing existing cross correlation between Natural Resource Partners and Yanzhou Coal Mining, you can compare the effects of market volatilities on Natural Resource and Yanzhou Coal 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 Natural Resource with a short position of Yanzhou Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natural Resource and Yanzhou Coal.

Diversification Opportunities for Natural Resource and Yanzhou Coal

0.57

Correlation Coefficient

Natural Resource  Yanzhou Coal

Very weak diversification

The 3 months correlation between Natural and Yanzhou is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Natural Resource Partners and Yanzhou Coal Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yanzhou Coal Mining and Natural Resource 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 Natural Resource Partners are associated (or correlated) with Yanzhou Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yanzhou Coal Mining has no effect on the direction of Natural Resource i.e., Natural Resource and Yanzhou Coal go up and down completely randomly.

Pair Corralation between Natural Resource and Yanzhou Coal

Considering the 90-day investment horizon Natural Resource is expected to generate 2.42 times less return on investment than Yanzhou Coal. But when comparing it to its historical volatility, Natural Resource Partners is 1.87 times less risky than Yanzhou Coal. It trades about 0.07 of its potential returns per unit of risk. Yanzhou Coal Mining is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  998.00  in Yanzhou Coal Mining on May 8, 2025 and sell it today you would earn a total of  143.00  from holding Yanzhou Coal Mining or generate 14.33% return on investment over 90 days.

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

Natural Resource Partners  vs.  Yanzhou Coal Mining

Natural Resource Partners

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Natural Resource Partners are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Natural Resource may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Yanzhou Coal Mining

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Yanzhou Coal Mining are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Yanzhou Coal showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Natural Resource and Yanzhou Coal

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

The idea behind Natural Resource Partners and Yanzhou Coal Mining 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.