Correlation Between Whitehaven Coal and PT Bayan
Can any of the company-specific risk be diversified away by investing in both Whitehaven Coal and PT Bayan 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 Whitehaven Coal and PT Bayan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Whitehaven Coal Limited and PT Bayan Resources, you can compare the effects of market volatilities on Whitehaven Coal and PT Bayan 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 Whitehaven Coal with a short position of PT Bayan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Whitehaven Coal and PT Bayan.
Diversification Opportunities for Whitehaven Coal and PT Bayan
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Whitehaven and BNB is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Whitehaven Coal Limited and PT Bayan Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bayan Resources and Whitehaven Coal 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 Whitehaven Coal Limited are associated (or correlated) with PT Bayan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Bayan Resources has no effect on the direction of Whitehaven Coal i.e., Whitehaven Coal and PT Bayan go up and down completely randomly.
Pair Corralation between Whitehaven Coal and PT Bayan
Assuming the 90 days horizon Whitehaven Coal Limited is expected to under-perform the PT Bayan. But the stock apears to be less risky and, when comparing its historical volatility, Whitehaven Coal Limited is 2.55 times less risky than PT Bayan. The stock trades about -0.05 of its potential returns per unit of risk. The PT Bayan Resources is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 97.00 in PT Bayan Resources on September 5, 2024 and sell it today you would earn a total of 18.00 from holding PT Bayan Resources or generate 18.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Whitehaven Coal Limited vs. PT Bayan Resources
Performance |
| Timeline |
| Whitehaven Coal |
| PT Bayan Resources |
Whitehaven Coal and PT Bayan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Whitehaven Coal and PT Bayan
The main advantage of trading using opposite Whitehaven Coal and PT Bayan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Whitehaven Coal position performs unexpectedly, PT Bayan 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 PT Bayan will offset losses from the drop in PT Bayan's long position.| Whitehaven Coal vs. PT Bayan Resources | Whitehaven Coal vs. Yanzhou Coal Mining | Whitehaven Coal vs. Yanzhou Coal Mining | Whitehaven Coal vs. PT Adaro Energy |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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