Correlation Between Coal India and Trent
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By analyzing existing cross correlation between Coal India Limited and Trent Limited, you can compare the effects of market volatilities on Coal India and Trent 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 Coal India with a short position of Trent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coal India and Trent.
Diversification Opportunities for Coal India and Trent
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Coal and Trent is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Coal India Limited and Trent Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trent Limited and Coal India 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 Coal India Limited are associated (or correlated) with Trent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trent Limited has no effect on the direction of Coal India i.e., Coal India and Trent go up and down completely randomly.
Pair Corralation between Coal India and Trent
Assuming the 90 days trading horizon Coal India Limited is expected to under-perform the Trent. But the stock apears to be less risky and, when comparing its historical volatility, Coal India Limited is 1.71 times less risky than Trent. The stock trades about -0.3 of its potential returns per unit of risk. The Trent Limited is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 712,835 in Trent Limited on September 1, 2024 and sell it today you would lose (33,295) from holding Trent Limited or give up 4.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Coal India Limited vs. Trent Limited
Performance |
| Timeline |
| Coal India Limited |
| Trent Limited |
Coal India and Trent Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coal India and Trent
The main advantage of trading using opposite Coal India and Trent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coal India position performs unexpectedly, Trent 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 Trent will offset losses from the drop in Trent's long position.| Coal India vs. Indo Borax Chemicals | Coal India vs. Tata Chemicals Limited | Coal India vs. Motilal Oswal Financial | Coal India vs. Vishnu Chemicals Limited |
| Trent vs. Action Construction Equipment | Trent vs. Manaksia Coated Metals | Trent vs. Hilton Metal Forging | Trent vs. LLOYDS METALS AND |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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