Correlation Between Exxaro Resources and Geo Energy
Can any of the company-specific risk be diversified away by investing in both Exxaro Resources and Geo 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 Exxaro Resources and Geo Energy 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 Geo Energy Resources, you can compare the effects of market volatilities on Exxaro Resources and Geo 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 Exxaro Resources with a short position of Geo Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxaro Resources and Geo Energy.
Diversification Opportunities for Exxaro Resources and Geo Energy
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Exxaro and Geo is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Exxaro Resources Limited and Geo Energy Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geo Energy Resources 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 Geo Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geo Energy Resources has no effect on the direction of Exxaro Resources i.e., Exxaro Resources and Geo Energy go up and down completely randomly.
Pair Corralation between Exxaro Resources and Geo Energy
Assuming the 90 days horizon Exxaro Resources Limited is expected to generate 1.8 times more return on investment than Geo Energy. However, Exxaro Resources is 1.8 times more volatile than Geo Energy Resources. It trades about 0.22 of its potential returns per unit of risk. Geo Energy Resources is currently generating about 0.01 per unit of risk. If you would invest 733.00 in Exxaro Resources Limited on August 31, 2024 and sell it today you would earn a total of 317.00 from holding Exxaro Resources Limited or generate 43.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 8.04% |
| Values | Daily Returns |
Exxaro Resources Limited vs. Geo Energy Resources
Performance |
| Timeline |
| Exxaro Resources |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Geo Energy Resources |
Exxaro Resources and Geo Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxaro Resources and Geo Energy
The main advantage of trading using opposite Exxaro Resources and Geo Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxaro Resources position performs unexpectedly, Geo 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 Geo Energy will offset losses from the drop in Geo Energy'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 |
| Geo Energy vs. Indo Tambangraya Megah | Geo Energy vs. Adaro Energy Tbk | Geo Energy vs. Thungela Resources Limited | Geo Energy vs. China Shenhua Energy |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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