Correlation Between Banpu PCL and CONSOL Energy
Can any of the company-specific risk be diversified away by investing in both Banpu PCL and CONSOL 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 Banpu PCL and CONSOL Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banpu PCL and CONSOL Energy, you can compare the effects of market volatilities on Banpu PCL and CONSOL 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 Banpu PCL with a short position of CONSOL Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banpu PCL and CONSOL Energy.
Diversification Opportunities for Banpu PCL and CONSOL Energy
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Banpu and CONSOL is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Banpu PCL and CONSOL Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONSOL Energy and Banpu PCL 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 Banpu PCL are associated (or correlated) with CONSOL Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONSOL Energy has no effect on the direction of Banpu PCL i.e., Banpu PCL and CONSOL Energy go up and down completely randomly.
Pair Corralation between Banpu PCL and CONSOL Energy
Assuming the 90 days trading horizon Banpu PCL is expected to under-perform the CONSOL Energy. In addition to that, Banpu PCL is 2.23 times more volatile than CONSOL Energy. It trades about -0.05 of its total potential returns per unit of risk. CONSOL Energy is currently generating about 0.32 per unit of volatility. If you would invest 10,138 in CONSOL Energy on September 2, 2024 and sell it today you would earn a total of 2,377 from holding CONSOL Energy or generate 23.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banpu PCL vs. CONSOL Energy
Performance |
| Timeline |
| Banpu PCL |
| CONSOL Energy |
Banpu PCL and CONSOL Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banpu PCL and CONSOL Energy
The main advantage of trading using opposite Banpu PCL and CONSOL Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banpu PCL position performs unexpectedly, CONSOL 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 CONSOL Energy will offset losses from the drop in CONSOL Energy's long position.| Banpu PCL vs. International Consolidated Airlines | Banpu PCL vs. USWE SPORTS AB | Banpu PCL vs. United Airlines Holdings | Banpu PCL vs. Air Transport Services |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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