Correlation Between PT Adaro and Whitehaven Coal
Can any of the company-specific risk be diversified away by investing in both PT Adaro and Whitehaven 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 PT Adaro and Whitehaven Coal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PT Adaro Energy and Whitehaven Coal Limited, you can compare the effects of market volatilities on PT Adaro and Whitehaven 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 PT Adaro with a short position of Whitehaven Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Adaro and Whitehaven Coal.
Diversification Opportunities for PT Adaro and Whitehaven Coal
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between A64 and Whitehaven is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding PT Adaro Energy and Whitehaven Coal Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitehaven Coal and PT Adaro 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 PT Adaro Energy are associated (or correlated) with Whitehaven Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whitehaven Coal has no effect on the direction of PT Adaro i.e., PT Adaro and Whitehaven Coal go up and down completely randomly.
Pair Corralation between PT Adaro and Whitehaven Coal
Assuming the 90 days horizon PT Adaro Energy is expected to under-perform the Whitehaven Coal. In addition to that, PT Adaro is 4.79 times more volatile than Whitehaven Coal Limited. It trades about -0.22 of its total potential returns per unit of risk. Whitehaven Coal Limited is currently generating about -0.05 per unit of volatility. If you would invest 402.00 in Whitehaven Coal Limited on September 5, 2024 and sell it today you would lose (9.00) from holding Whitehaven Coal Limited or give up 2.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Adaro Energy vs. Whitehaven Coal Limited
Performance |
| Timeline |
| PT Adaro Energy |
| Whitehaven Coal |
PT Adaro and Whitehaven Coal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Adaro and Whitehaven Coal
The main advantage of trading using opposite PT Adaro and Whitehaven Coal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Adaro position performs unexpectedly, Whitehaven 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 Whitehaven Coal will offset losses from the drop in Whitehaven Coal's long position.| PT Adaro vs. PT Bayan Resources | PT Adaro vs. Yanzhou Coal Mining | PT Adaro vs. Yanzhou Coal Mining | PT Adaro vs. PT Bumi Resources |
| Whitehaven Coal vs. PT Bayan Resources | Whitehaven Coal vs. Yanzhou Coal Mining | Whitehaven Coal vs. Yanzhou Coal Mining | Whitehaven Coal vs. PT Adaro Energy |
Check out your portfolio center.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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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