Correlation Between Coronado Global and Butn

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

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

Diversification Opportunities for Coronado Global and Butn

-0.76

Correlation Coefficient

Coronado Global  Butn

Pay attention - limited upside

The 3 months correlation between Coronado and Butn is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Coronado Global Resources and Butn in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Butn and Coronado Global 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 Coronado Global Resources are associated (or correlated) with Butn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Butn has no effect on the direction of Coronado Global i.e., Coronado Global and Butn go up and down completely randomly.

Pair Corralation between Coronado Global and Butn

Assuming the 90 days trading horizon Coronado Global Resources is expected to under-perform the Butn. But the stock apears to be less risky and, when comparing its historical volatility, Coronado Global Resources is 1.65 times less risky than Butn. The stock trades about -0.06 of its potential returns per unit of risk. The Butn is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Butn on September 28, 2024 and sell it today you would lose (7.00) from holding Butn or give up 50.0% of portfolio value over 90 days.

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

Coronado Global Resources  vs.  Butn

Coronado Global Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coronado Global Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Butn

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Butn are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Butn unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Coronado Global and Butn

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

The idea behind Coronado Global Resources and Butn 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.