Correlation Between PT Bayan and Whitehaven Coal
Can any of the company-specific risk be diversified away by investing in both PT Bayan 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 Bayan 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 Bayan Resources and Whitehaven Coal Limited, you can compare the effects of market volatilities on PT Bayan 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 Bayan with a short position of Whitehaven Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bayan and Whitehaven Coal.
Diversification Opportunities for PT Bayan and Whitehaven Coal
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BNB and Whitehaven is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding PT Bayan Resources 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 Bayan 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 Bayan Resources 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 Bayan i.e., PT Bayan and Whitehaven Coal go up and down completely randomly.
Pair Corralation between PT Bayan and Whitehaven Coal
Assuming the 90 days horizon PT Bayan Resources is expected to generate 2.55 times more return on investment than Whitehaven Coal. However, PT Bayan is 2.55 times more volatile than Whitehaven Coal Limited. It trades about 0.21 of its potential returns per unit of risk. Whitehaven Coal Limited is currently generating about -0.05 per unit of risk. If you would invest 97.00 in PT Bayan Resources on September 5, 2024 and sell it today you would earn a total of 18.00 from holding PT Bayan Resources or generate 18.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
PT Bayan Resources vs. Whitehaven Coal Limited
Performance |
| Timeline |
| PT Bayan Resources |
| Whitehaven Coal |
PT Bayan and Whitehaven Coal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bayan and Whitehaven Coal
The main advantage of trading using opposite PT Bayan and Whitehaven Coal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bayan 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 Bayan vs. Regions Financial | PT Bayan vs. JD SPORTS FASH | PT Bayan vs. G III Apparel Group | PT Bayan vs. ANTA SPORTS PRODUCT |
| 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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