Correlation Between Exxaro Resources and China Coal
Can any of the company-specific risk be diversified away by investing in both Exxaro Resources and China 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 Exxaro Resources and China Coal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exxaro Resources Limited and China Coal Energy, you can compare the effects of market volatilities on Exxaro Resources and China 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 Exxaro Resources with a short position of China Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxaro Resources and China Coal.
Diversification Opportunities for Exxaro Resources and China Coal
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Exxaro and China is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Exxaro Resources Limited and China Coal Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Coal Energy and Exxaro Resources 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 Exxaro Resources Limited are associated (or correlated) with China Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Coal Energy has no effect on the direction of Exxaro Resources i.e., Exxaro Resources and China Coal go up and down completely randomly.
Pair Corralation between Exxaro Resources and China Coal
Assuming the 90 days horizon Exxaro Resources Limited is expected to generate 1.46 times more return on investment than China Coal. However, Exxaro Resources is 1.46 times more volatile than China Coal Energy. It trades about 0.13 of its potential returns per unit of risk. China Coal Energy is currently generating about 0.06 per unit of risk. If you would invest 933.00 in Exxaro Resources Limited on September 1, 2024 and sell it today you would earn a total of 117.00 from holding Exxaro Resources Limited or generate 12.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 7.06% |
| Values | Daily Returns |
Exxaro Resources Limited vs. China Coal Energy
Performance |
| Timeline |
| Exxaro Resources |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| China Coal Energy |
Exxaro Resources and China Coal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxaro Resources and China Coal
The main advantage of trading using opposite Exxaro Resources and China Coal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxaro Resources position performs unexpectedly, China 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 China Coal will offset losses from the drop in China Coal's long position.| Exxaro Resources vs. Yancoal Australia | Exxaro Resources vs. China Coal Energy | Exxaro Resources vs. Bukit Asam Tbk | Exxaro Resources vs. Indo Tambangraya Megah |
| China Coal vs. Yuexiu Transport Infrastructure | China Coal vs. Academy Sports Outdoors | China Coal vs. Hooker Furniture | China Coal vs. NioCorp Developments Ltd |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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