Correlation Between Whitehaven Coal and China Shenhua
Can any of the company-specific risk be diversified away by investing in both Whitehaven Coal and China Shenhua 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 China Shenhua 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 China Shenhua Energy, you can compare the effects of market volatilities on Whitehaven Coal and China Shenhua 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 China Shenhua. Check out your portfolio center. Please also check ongoing floating volatility patterns of Whitehaven Coal and China Shenhua.
Diversification Opportunities for Whitehaven Coal and China Shenhua
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Whitehaven and China is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Whitehaven Coal Limited and China Shenhua Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Shenhua Energy 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 China Shenhua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Shenhua Energy has no effect on the direction of Whitehaven Coal i.e., Whitehaven Coal and China Shenhua go up and down completely randomly.
Pair Corralation between Whitehaven Coal and China Shenhua
Assuming the 90 days horizon Whitehaven Coal Limited is expected to under-perform the China Shenhua. But the stock apears to be less risky and, when comparing its historical volatility, Whitehaven Coal Limited is 1.85 times less risky than China Shenhua. The stock trades about 0.0 of its potential returns per unit of risk. The China Shenhua Energy is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 125.00 in China Shenhua Energy on September 3, 2024 and sell it today you would earn a total of 259.00 from holding China Shenhua Energy or generate 207.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Whitehaven Coal Limited vs. China Shenhua Energy
Performance |
| Timeline |
| Whitehaven Coal |
| China Shenhua Energy |
Whitehaven Coal and China Shenhua Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Whitehaven Coal and China Shenhua
The main advantage of trading using opposite Whitehaven Coal and China Shenhua positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Whitehaven Coal position performs unexpectedly, China Shenhua 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 China Shenhua will offset losses from the drop in China Shenhua's long position.| Whitehaven Coal vs. Zoom Video Communications | Whitehaven Coal vs. Chunghwa Telecom Co | Whitehaven Coal vs. National Retail Properties | Whitehaven Coal vs. PICKN PAY STORES |
| China Shenhua vs. Bumrungrad Hospital Public | China Shenhua vs. PREMIER FOODS | China Shenhua vs. FEMALE HEALTH | China Shenhua vs. EHEALTH |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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