Correlation Between China Coal and Ichor Coal
Can any of the company-specific risk be diversified away by investing in both China Coal and Ichor 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 China Coal and Ichor Coal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Coal Energy and Ichor Coal NV, you can compare the effects of market volatilities on China Coal and Ichor 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 China Coal with a short position of Ichor Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Coal and Ichor Coal.
Diversification Opportunities for China Coal and Ichor Coal
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and Ichor is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding China Coal Energy and Ichor Coal NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ichor Coal NV and China 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 China Coal Energy are associated (or correlated) with Ichor Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ichor Coal NV has no effect on the direction of China Coal i.e., China Coal and Ichor Coal go up and down completely randomly.
Pair Corralation between China Coal and Ichor Coal
Assuming the 90 days horizon China Coal Energy is expected to generate 0.44 times more return on investment than Ichor Coal. However, China Coal Energy is 2.25 times less risky than Ichor Coal. It trades about 0.14 of its potential returns per unit of risk. Ichor Coal NV is currently generating about -0.24 per unit of risk. If you would invest 107.00 in China Coal Energy on September 13, 2024 and sell it today you would earn a total of 8.00 from holding China Coal Energy or generate 7.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Coal Energy vs. Ichor Coal NV
Performance |
| Timeline |
| China Coal Energy |
| Ichor Coal NV |
China Coal and Ichor Coal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Coal and Ichor Coal
The main advantage of trading using opposite China Coal and Ichor Coal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Coal position performs unexpectedly, Ichor 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 Ichor Coal will offset losses from the drop in Ichor Coal's long position.| China Coal vs. Iridium Communications | China Coal vs. Sanyo Chemical Industries | China Coal vs. Eastman Chemical | China Coal vs. Quaker Chemical |
| Ichor Coal vs. CHINA SHENHUA ENA | Ichor Coal vs. China Coal Energy | Ichor Coal vs. Yancoal Australia | Ichor Coal vs. Banpu PCL |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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