Correlation Between Consol Energy and Adaro Energy
Can any of the company-specific risk be diversified away by investing in both Consol Energy and Adaro Energy 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 Consol Energy and Adaro Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consol Energy and Adaro Energy Tbk, you can compare the effects of market volatilities on Consol Energy and Adaro Energy 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 Consol Energy with a short position of Adaro Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consol Energy and Adaro Energy.
Diversification Opportunities for Consol Energy and Adaro Energy
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Consol and Adaro is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Consol Energy and Adaro Energy Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adaro Energy Tbk and Consol Energy 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 Consol Energy are associated (or correlated) with Adaro Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adaro Energy Tbk has no effect on the direction of Consol Energy i.e., Consol Energy and Adaro Energy go up and down completely randomly.
Pair Corralation between Consol Energy and Adaro Energy
Given the investment horizon of 90 days Consol Energy is expected to generate 0.64 times more return on investment than Adaro Energy. However, Consol Energy is 1.55 times less risky than Adaro Energy. It trades about 0.32 of its potential returns per unit of risk. Adaro Energy Tbk is currently generating about 0.0 per unit of risk. If you would invest 10,913 in Consol Energy on August 28, 2024 and sell it today you would earn a total of 2,420 from holding Consol Energy or generate 22.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consol Energy vs. Adaro Energy Tbk
Performance |
| Timeline |
| Consol Energy |
| Adaro Energy Tbk |
Consol Energy and Adaro Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consol Energy and Adaro Energy
The main advantage of trading using opposite Consol Energy and Adaro Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consol Energy position performs unexpectedly, Adaro Energy 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 Adaro Energy will offset losses from the drop in Adaro Energy's long position.| Consol Energy vs. Alliance Resource Partners | Consol Energy vs. Natural Resource Partners | Consol Energy vs. Hallador Energy | Consol Energy vs. NACCO Industries |
| Adaro Energy vs. Alliance Resource Partners | Adaro Energy vs. Astera Labs, Common | Adaro Energy vs. Autodesk | Adaro Energy vs. Applied Blockchain |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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