Correlation Between Exxaro Resources and TerraCom
Can any of the company-specific risk be diversified away by investing in both Exxaro Resources and TerraCom 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 TerraCom 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 TerraCom Limited, you can compare the effects of market volatilities on Exxaro Resources and TerraCom 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 TerraCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxaro Resources and TerraCom.
Diversification Opportunities for Exxaro Resources and TerraCom
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Exxaro and TerraCom is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Exxaro Resources Limited and TerraCom Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TerraCom Limited 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 TerraCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TerraCom Limited has no effect on the direction of Exxaro Resources i.e., Exxaro Resources and TerraCom go up and down completely randomly.
Pair Corralation between Exxaro Resources and TerraCom
If you would invest 14.00 in TerraCom Limited on August 28, 2024 and sell it today you would earn a total of 2.00 from holding TerraCom Limited or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 25.0% |
| Values | Daily Returns |
Exxaro Resources Limited vs. TerraCom Limited
Performance |
| Timeline |
| Exxaro Resources |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| TerraCom Limited |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Exxaro Resources and TerraCom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxaro Resources and TerraCom
The main advantage of trading using opposite Exxaro Resources and TerraCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxaro Resources position performs unexpectedly, TerraCom 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 TerraCom will offset losses from the drop in TerraCom'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 |
| TerraCom vs. Indo Tambangraya Megah | TerraCom vs. Adaro Energy Tbk | TerraCom vs. Thungela Resources Limited | TerraCom vs. China Coal 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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