Correlation Between NACCO Industries and Adaro Energy
Can any of the company-specific risk be diversified away by investing in both NACCO Industries and Adaro 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 NACCO Industries and Adaro Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NACCO Industries and Adaro Energy Tbk, you can compare the effects of market volatilities on NACCO Industries and Adaro 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 NACCO Industries with a short position of Adaro Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of NACCO Industries and Adaro Energy.
Diversification Opportunities for NACCO Industries and Adaro Energy
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NACCO and Adaro is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding NACCO Industries and Adaro Energy Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adaro Energy Tbk and NACCO Industries 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 NACCO Industries are associated (or correlated) with Adaro Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adaro Energy Tbk has no effect on the direction of NACCO Industries i.e., NACCO Industries and Adaro Energy go up and down completely randomly.
Pair Corralation between NACCO Industries and Adaro Energy
Allowing for the 90-day total investment horizon NACCO Industries is expected to generate 0.23 times more return on investment than Adaro Energy. However, NACCO Industries is 4.39 times less risky than Adaro Energy. It trades about 0.31 of its potential returns per unit of risk. Adaro Energy Tbk is currently generating about -0.25 per unit of risk. If you would invest 3,000 in NACCO Industries on November 2, 2024 and sell it today you would earn a total of 203.00 from holding NACCO Industries or generate 6.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NACCO Industries vs. Adaro Energy Tbk
Performance |
| Timeline |
| NACCO Industries |
| Adaro Energy Tbk |
NACCO Industries and Adaro Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NACCO Industries and Adaro Energy
The main advantage of trading using opposite NACCO Industries and Adaro Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NACCO Industries position performs unexpectedly, Adaro 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 Adaro Energy will offset losses from the drop in Adaro Energy's long position.| NACCO Industries vs. Alliance Resource Partners | NACCO Industries vs. Hallador Energy | NACCO Industries vs. Indo Tambangraya Megah | NACCO Industries vs. Natural Resource Partners |
| Adaro Energy vs. Thungela Resources Limited | Adaro Energy vs. Geo Energy Resources | Adaro Energy vs. Bukit Asam Tbk | Adaro 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Commodity Directory Find actively traded commodities issued by global exchanges |