Correlation Between Celanese and Ramaco Resources

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

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

Diversification Opportunities for Celanese and Ramaco Resources

0.41

Correlation Coefficient

Celanese  Ramaco Resources

Very weak diversification

The 3 months correlation between Celanese and Ramaco is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Celanese and Ramaco Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ramaco Resources and Celanese 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 Celanese are associated (or correlated) with Ramaco Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ramaco Resources has no effect on the direction of Celanese i.e., Celanese and Ramaco Resources go up and down completely randomly.

Pair Corralation between Celanese and Ramaco Resources

Allowing for the 90-day total investment horizon Celanese is expected to under-perform the Ramaco Resources. But the stock apears to be less risky and, when comparing its historical volatility, Celanese is 1.64 times less risky than Ramaco Resources. The stock trades about -0.05 of its potential returns per unit of risk. The Ramaco Resources is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  1,000.00  in Ramaco Resources on December 28, 2024 and sell it today you would lose (184.00) from holding Ramaco Resources or give up 18.4% of portfolio value over 90 days.

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

Celanese  vs.  Ramaco Resources

Celanese

Risk-Adjusted Performance

Very Weak

Over the last 90 days Celanese has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Ramaco Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ramaco Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Celanese and Ramaco Resources

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

The idea behind Celanese and Ramaco Resources 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.