Correlation Between SunCoke Energy and Ramaco Resources
Can any of the company-specific risk be diversified away by investing in both SunCoke Energy and Ramaco Resources 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 SunCoke Energy and Ramaco Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SunCoke Energy and Ramaco Resources, you can compare the effects of market volatilities on SunCoke Energy and Ramaco Resources 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 SunCoke Energy with a short position of Ramaco Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of SunCoke Energy and Ramaco Resources.
Diversification Opportunities for SunCoke Energy and Ramaco Resources
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SunCoke and Ramaco is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding SunCoke Energy and Ramaco Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ramaco Resources and SunCoke 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 SunCoke Energy are associated (or correlated) with Ramaco Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ramaco Resources has no effect on the direction of SunCoke Energy i.e., SunCoke Energy and Ramaco Resources go up and down completely randomly.
Pair Corralation between SunCoke Energy and Ramaco Resources
Considering the 90-day investment horizon SunCoke Energy is expected to generate 0.66 times more return on investment than Ramaco Resources. However, SunCoke Energy is 1.51 times less risky than Ramaco Resources. It trades about 0.02 of its potential returns per unit of risk. Ramaco Resources is currently generating about -0.05 per unit of risk. If you would invest 1,009 in SunCoke Energy on October 20, 2024 and sell it today you would earn a total of 22.00 from holding SunCoke Energy or generate 2.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SunCoke Energy vs. Ramaco Resources
Performance |
| Timeline |
| SunCoke Energy |
| Ramaco Resources |
SunCoke Energy and Ramaco Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SunCoke Energy and Ramaco Resources
The main advantage of trading using opposite SunCoke Energy and Ramaco Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SunCoke Energy position performs unexpectedly, Ramaco Resources 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 Ramaco Resources will offset losses from the drop in Ramaco Resources' long position.| SunCoke Energy vs. Warrior Met Coal | SunCoke Energy vs. Arch Resources | SunCoke Energy vs. Alpha Metallurgical Resources | SunCoke Energy vs. American Resources Corp |
| Ramaco Resources vs. Warrior Met Coal | Ramaco Resources vs. Arch Resources | Ramaco Resources vs. Alpha Metallurgical Resources | Ramaco Resources vs. American Resources Corp |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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