Correlation Between Colonial Coal and Batero Gold
Can any of the company-specific risk be diversified away by investing in both Colonial Coal and Batero Gold 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 Colonial Coal and Batero Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Colonial Coal International and Batero Gold Corp, you can compare the effects of market volatilities on Colonial Coal and Batero Gold 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 Colonial Coal with a short position of Batero Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Colonial Coal and Batero Gold.
Diversification Opportunities for Colonial Coal and Batero Gold
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Colonial and Batero is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Colonial Coal International and Batero Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Batero Gold Corp and Colonial Coal 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 Colonial Coal International are associated (or correlated) with Batero Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Batero Gold Corp has no effect on the direction of Colonial Coal i.e., Colonial Coal and Batero Gold go up and down completely randomly.
Pair Corralation between Colonial Coal and Batero Gold
Assuming the 90 days horizon Colonial Coal International is expected to under-perform the Batero Gold. But the stock apears to be less risky and, when comparing its historical volatility, Colonial Coal International is 3.99 times less risky than Batero Gold. The stock trades about -0.08 of its potential returns per unit of risk. The Batero Gold Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 5.00 in Batero Gold Corp on September 3, 2024 and sell it today you would earn a total of 0.00 from holding Batero Gold Corp or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Colonial Coal International vs. Batero Gold Corp
Performance |
| Timeline |
| Colonial Coal Intern |
| Batero Gold Corp |
Colonial Coal and Batero Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Colonial Coal and Batero Gold
The main advantage of trading using opposite Colonial Coal and Batero Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Colonial Coal position performs unexpectedly, Batero Gold 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 Batero Gold will offset losses from the drop in Batero Gold's long position.| Colonial Coal vs. Batero Gold Corp | Colonial Coal vs. Bravada Gold | Colonial Coal vs. Black Widow Resources | Colonial Coal vs. Angkor Resources Corp |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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