Correlation Between First Horizon and China Coal

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

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

Diversification Opportunities for First Horizon and China Coal

0.0

Correlation Coefficient

First Horizon  China Coal

Pay attention - limited upside

The 3 months correlation between First and China is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding First Horizon National and China Coal Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Coal Energy and First Horizon 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 First Horizon National are associated (or correlated) with China Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Coal Energy has no effect on the direction of First Horizon i.e., First Horizon and China Coal go up and down completely randomly.

Pair Corralation between First Horizon and China Coal

If you would invest (100.00) in China Coal Energy on December 29, 2024 and sell it today you would earn a total of  100.00  from holding China Coal Energy or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

First Horizon National  vs.  China Coal Energy

First Horizon National

Risk-Adjusted Performance

Very Weak

Over the last 90 days First Horizon National has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, First Horizon is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

China Coal Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days China Coal Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, China Coal is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with First Horizon and China Coal

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

The idea behind First Horizon National and China Coal 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..