Correlation Between Whitehaven Coal and Indo Tambangraya
Can any of the company-specific risk be diversified away by investing in both Whitehaven Coal and Indo Tambangraya 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 Indo Tambangraya 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 Indo Tambangraya Megah, you can compare the effects of market volatilities on Whitehaven Coal and Indo Tambangraya 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 Indo Tambangraya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Whitehaven Coal and Indo Tambangraya.
Diversification Opportunities for Whitehaven Coal and Indo Tambangraya
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Whitehaven and Indo is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Whitehaven Coal Limited and Indo Tambangraya Megah in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indo Tambangraya Megah 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 Indo Tambangraya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indo Tambangraya Megah has no effect on the direction of Whitehaven Coal i.e., Whitehaven Coal and Indo Tambangraya go up and down completely randomly.
Pair Corralation between Whitehaven Coal and Indo Tambangraya
Assuming the 90 days horizon Whitehaven Coal Limited is expected to under-perform the Indo Tambangraya. In addition to that, Whitehaven Coal is 1.02 times more volatile than Indo Tambangraya Megah. It trades about -0.05 of its total potential returns per unit of risk. Indo Tambangraya Megah is currently generating about 0.02 per unit of volatility. If you would invest 297.00 in Indo Tambangraya Megah on September 1, 2024 and sell it today you would earn a total of 4.00 from holding Indo Tambangraya Megah or generate 1.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Whitehaven Coal Limited vs. Indo Tambangraya Megah
Performance |
| Timeline |
| Whitehaven Coal |
| Indo Tambangraya Megah |
Whitehaven Coal and Indo Tambangraya Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Whitehaven Coal and Indo Tambangraya
The main advantage of trading using opposite Whitehaven Coal and Indo Tambangraya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Whitehaven Coal position performs unexpectedly, Indo Tambangraya 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 Indo Tambangraya will offset losses from the drop in Indo Tambangraya's long position.| Whitehaven Coal vs. New Hope | Whitehaven Coal vs. Adaro Energy Tbk | Whitehaven Coal vs. Thungela Resources Limited | Whitehaven Coal vs. Yancoal Australia |
| Indo Tambangraya vs. Bukit Asam Tbk | Indo Tambangraya vs. Adaro Energy Tbk | Indo Tambangraya vs. Geo Energy Resources | Indo Tambangraya vs. Yanzhou Coal Mining |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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