Correlation Between TerraCom and Exxaro Resources
Can any of the company-specific risk be diversified away by investing in both TerraCom and Exxaro 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 TerraCom and Exxaro Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TerraCom Limited and Exxaro Resources Limited, you can compare the effects of market volatilities on TerraCom and Exxaro 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 TerraCom with a short position of Exxaro Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of TerraCom and Exxaro Resources.
Diversification Opportunities for TerraCom and Exxaro Resources
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between TerraCom and Exxaro is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding TerraCom Limited and Exxaro Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exxaro Resources and TerraCom 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 TerraCom Limited are associated (or correlated) with Exxaro Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exxaro Resources has no effect on the direction of TerraCom i.e., TerraCom and Exxaro Resources go up and down completely randomly.
Pair Corralation between TerraCom and Exxaro Resources
If you would invest 14.00 in TerraCom Limited on August 28, 2024 and sell it today you would earn a total of 2.00 from holding TerraCom Limited or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 25.0% |
| Values | Daily Returns |
TerraCom Limited vs. Exxaro Resources Limited
Performance |
| Timeline |
| TerraCom Limited |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| Exxaro Resources |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
TerraCom and Exxaro Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TerraCom and Exxaro Resources
The main advantage of trading using opposite TerraCom and Exxaro Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TerraCom position performs unexpectedly, Exxaro 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 Exxaro Resources will offset losses from the drop in Exxaro Resources' long position.| TerraCom vs. Indo Tambangraya Megah | TerraCom vs. Adaro Energy Tbk | TerraCom vs. Thungela Resources Limited | TerraCom vs. China Coal Energy |
| Exxaro Resources vs. Yancoal Australia | Exxaro Resources vs. China Coal Energy | Exxaro Resources vs. Bukit Asam Tbk | Exxaro Resources vs. Indo Tambangraya Megah |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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