Correlation Between CONSOL Energy and Banpu PCL

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

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

Diversification Opportunities for CONSOL Energy and Banpu PCL

-0.81

Correlation Coefficient

CONSOL Energy  Banpu PCL

Pay attention - limited upside

The 3 months correlation between CONSOL and Banpu is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding CONSOL Energy and Banpu PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banpu PCL and CONSOL Energy 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 CONSOL Energy are associated (or correlated) with Banpu PCL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banpu PCL has no effect on the direction of CONSOL Energy i.e., CONSOL Energy and Banpu PCL go up and down completely randomly.

Pair Corralation between CONSOL Energy and Banpu PCL

Assuming the 90 days horizon CONSOL Energy is expected to generate 0.43 times more return on investment than Banpu PCL. However, CONSOL Energy is 2.31 times less risky than Banpu PCL. It trades about 0.06 of its potential returns per unit of risk. Banpu PCL is currently generating about 0.0 per unit of risk. If you would invest  5,809  in CONSOL Energy on September 23, 2024 and sell it today you would earn a total of  4,541  from holding CONSOL Energy or generate 78.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

CONSOL Energy  vs.  Banpu PCL

CONSOL Energy

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CONSOL Energy are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CONSOL Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Banpu PCL

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with CONSOL Energy and Banpu PCL

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

The idea behind CONSOL Energy and Banpu PCL 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.

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..