Correlation Between Whitehaven Coal and PT Adaro
Can any of the company-specific risk be diversified away by investing in both Whitehaven Coal and PT Adaro 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 Adaro 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 Adaro Energy, you can compare the effects of market volatilities on Whitehaven Coal and PT Adaro 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 Adaro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Whitehaven Coal and PT Adaro.
Diversification Opportunities for Whitehaven Coal and PT Adaro
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Whitehaven and PADEF is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Whitehaven Coal Limited and PT Adaro Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Adaro 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 PT Adaro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Adaro Energy has no effect on the direction of Whitehaven Coal i.e., Whitehaven Coal and PT Adaro go up and down completely randomly.
Pair Corralation between Whitehaven Coal and PT Adaro
Assuming the 90 days horizon Whitehaven Coal Limited is expected to under-perform the PT Adaro. But the pink sheet apears to be less risky and, when comparing its historical volatility, Whitehaven Coal Limited is 3.91 times less risky than PT Adaro. The pink sheet trades about 0.0 of its potential returns per unit of risk. The PT Adaro Energy is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 18.00 in PT Adaro Energy on September 3, 2024 and sell it today you would earn a total of 4.00 from holding PT Adaro Energy or generate 22.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 8.48% |
| Values | Daily Returns |
Whitehaven Coal Limited vs. PT Adaro Energy
Performance |
| Timeline |
| Whitehaven Coal |
| PT Adaro Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
Whitehaven Coal and PT Adaro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Whitehaven Coal and PT Adaro
The main advantage of trading using opposite Whitehaven Coal and PT Adaro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Whitehaven Coal position performs unexpectedly, PT Adaro 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 Adaro will offset losses from the drop in PT Adaro'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 |
| PT Adaro vs. Morien Resources Corp | PT Adaro vs. Adaro Energy Tbk | PT Adaro vs. Alliance Resource Partners | PT Adaro vs. Brera Holdings PLC |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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