Correlation Between GOODTECH ASA and CONSOL Energy

Can any of the company-specific risk be diversified away by investing in both GOODTECH ASA and CONSOL Energy 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 GOODTECH ASA and CONSOL Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GOODTECH ASA A and CONSOL Energy, you can compare the effects of market volatilities on GOODTECH ASA and CONSOL Energy 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 GOODTECH ASA with a short position of CONSOL Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of GOODTECH ASA and CONSOL Energy.

Diversification Opportunities for GOODTECH ASA and CONSOL Energy

-0.73

Correlation Coefficient

GOODTECH ASA  CONSOL Energy

Pay attention - limited upside

The 3 months correlation between GOODTECH and CONSOL is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding GOODTECH ASA A and CONSOL Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONSOL Energy and GOODTECH ASA 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 GOODTECH ASA A are associated (or correlated) with CONSOL Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONSOL Energy has no effect on the direction of GOODTECH ASA i.e., GOODTECH ASA and CONSOL Energy go up and down completely randomly.

Pair Corralation between GOODTECH ASA and CONSOL Energy

Assuming the 90 days horizon GOODTECH ASA is expected to generate 12.13 times less return on investment than CONSOL Energy. But when comparing it to its historical volatility, GOODTECH ASA A is 1.11 times less risky than CONSOL Energy. It trades about 0.0 of its potential returns per unit of risk. CONSOL Energy is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  8,648  in CONSOL Energy on October 10, 2024 and sell it today you would earn a total of  1,737  from holding CONSOL Energy or generate 20.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.6%
Values	Daily Returns

GOODTECH ASA A  vs.  CONSOL Energy

GOODTECH ASA A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GOODTECH ASA A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

CONSOL Energy

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CONSOL Energy are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, CONSOL Energy may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with GOODTECH ASA and CONSOL Energy

The main advantage of trading using opposite GOODTECH ASA and CONSOL Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GOODTECH ASA position performs unexpectedly, CONSOL Energy 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 CONSOL Energy will offset losses from the drop in CONSOL Energy's long position.

The idea behind GOODTECH ASA A and CONSOL Energy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.