Correlation Between Geo Energy and China Coal
Can any of the company-specific risk be diversified away by investing in both Geo Energy 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 Geo Energy and China Coal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Geo Energy Resources and China Coal Energy, you can compare the effects of market volatilities on Geo Energy 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 Geo Energy with a short position of China Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Geo Energy and China Coal.
Diversification Opportunities for Geo Energy and China Coal
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Geo and China is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Geo Energy Resources 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 Geo Energy 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 Geo Energy Resources 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 Geo Energy i.e., Geo Energy and China Coal go up and down completely randomly.
Pair Corralation between Geo Energy and China Coal
Assuming the 90 days horizon Geo Energy Resources is expected to under-perform the China Coal. But the pink sheet apears to be less risky and, when comparing its historical volatility, Geo Energy Resources is 1.94 times less risky than China Coal. The pink sheet trades about -0.02 of its potential returns per unit of risk. The China Coal Energy is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,503 in China Coal Energy on September 2, 2024 and sell it today you would lose (143.00) from holding China Coal Energy or give up 5.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Geo Energy Resources vs. China Coal Energy
Performance |
| Timeline |
| Geo Energy Resources |
| China Coal Energy |
Geo Energy and China Coal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Geo Energy and China Coal
The main advantage of trading using opposite Geo Energy and China Coal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Geo Energy 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.| Geo Energy vs. Yanzhou Coal Mining | Geo Energy vs. Indo Tambangraya Megah | Geo Energy vs. Bukit Asam Tbk | Geo Energy vs. Thungela Resources Limited |
| China Coal vs. Keurig Dr Pepper | China Coal vs. Ambev SA ADR | China Coal vs. Viemed Healthcare | China Coal vs. Sonida Senior Living |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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