Correlation Between New HopeLtd and Geo Energy
Can any of the company-specific risk be diversified away by investing in both New HopeLtd 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 New HopeLtd and Geo Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Hope and Geo Energy Resources, you can compare the effects of market volatilities on New HopeLtd 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 New HopeLtd with a short position of Geo Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of New HopeLtd and Geo Energy.
Diversification Opportunities for New HopeLtd and Geo Energy
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between New and Geo is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding New Hope 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 New HopeLtd 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 New Hope 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 New HopeLtd i.e., New HopeLtd and Geo Energy go up and down completely randomly.
Pair Corralation between New HopeLtd and Geo Energy
Assuming the 90 days horizon New Hope is expected to generate 3.19 times more return on investment than Geo Energy. However, New HopeLtd is 3.19 times more volatile than Geo Energy Resources. It trades about 0.06 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 280.00 in New Hope on September 2, 2024 and sell it today you would earn a total of 32.00 from holding New Hope or generate 11.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.34% |
| Values | Daily Returns |
New Hope vs. Geo Energy Resources
Performance |
| Timeline |
| New HopeLtd |
| Geo Energy Resources |
New HopeLtd and Geo Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New HopeLtd and Geo Energy
The main advantage of trading using opposite New HopeLtd and Geo Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New HopeLtd 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.| New HopeLtd vs. Whitehaven Coal Limited | New HopeLtd vs. Adaro Energy Tbk | New HopeLtd vs. Thungela Resources Limited | New HopeLtd vs. Yanzhou Coal Mining |
| Geo Energy vs. Yanzhou Coal Mining | Geo Energy vs. Indo Tambangraya Megah | Geo Energy vs. Bukit Asam Tbk | Geo Energy vs. Thungela Resources Limited |
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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