Correlation Between Yancoal Australia and CITIC

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

By analyzing existing cross correlation between Yancoal Australia and CITIC LTD ADR5, you can compare the effects of market volatilities on Yancoal Australia and CITIC 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 CITIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yancoal Australia and CITIC.

Diversification Opportunities for Yancoal Australia and CITIC

0.07

Correlation Coefficient

Yancoal Australia  CITIC

Significant diversification

The 3 months correlation between Yancoal and CITIC is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Yancoal Australia and CITIC LTD ADR5 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIC LTD ADR5 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 CITIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIC LTD ADR5 has no effect on the direction of Yancoal Australia i.e., Yancoal Australia and CITIC go up and down completely randomly.

Pair Corralation between Yancoal Australia and CITIC

Assuming the 90 days horizon Yancoal Australia is expected to under-perform the CITIC. In addition to that, Yancoal Australia is 1.7 times more volatile than CITIC LTD ADR5. It trades about -0.03 of its total potential returns per unit of risk. CITIC LTD ADR5 is currently generating about 0.07 per unit of volatility. If you would invest  554.00  in CITIC LTD ADR5 on July 1, 2025 and sell it today you would earn a total of  41.00  from holding CITIC LTD ADR5 or generate 7.4% 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.  CITIC LTD ADR5

Yancoal Australia

Risk-Adjusted Performance

Weakest

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

CITIC LTD ADR5

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in CITIC LTD ADR5 are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, CITIC may actually be approaching a critical reversion point that can send shares even higher in October 2025.

Pair Trading with Yancoal Australia and CITIC

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

The idea behind Yancoal Australia and CITIC LTD ADR5 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.