Correlation Between Ichor Coal and CHINA SHENHUA

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

By analyzing existing cross correlation between Ichor Coal NV and CHINA SHENHUA ENA, you can compare the effects of market volatilities on Ichor Coal and CHINA SHENHUA 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 Ichor Coal with a short position of CHINA SHENHUA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ichor Coal and CHINA SHENHUA.

Diversification Opportunities for Ichor Coal and CHINA SHENHUA

-0.19

Correlation Coefficient

Ichor Coal  CHINA SHENHUA

Good diversification

The 3 months correlation between Ichor and CHINA is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Ichor Coal NV and CHINA SHENHUA ENA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA SHENHUA ENA and Ichor Coal 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 Ichor Coal NV are associated (or correlated) with CHINA SHENHUA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA SHENHUA ENA has no effect on the direction of Ichor Coal i.e., Ichor Coal and CHINA SHENHUA go up and down completely randomly.

Pair Corralation between Ichor Coal and CHINA SHENHUA

If you would invest  1,560  in CHINA SHENHUA ENA on September 24, 2024 and sell it today you would earn a total of  0.00  from holding CHINA SHENHUA ENA or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.48%
Values	Daily Returns

Ichor Coal NV  vs.  CHINA SHENHUA ENA

Ichor Coal NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ichor Coal NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

CHINA SHENHUA ENA

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CHINA SHENHUA ENA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, CHINA SHENHUA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Ichor Coal and CHINA SHENHUA

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

The idea behind Ichor Coal NV and CHINA SHENHUA ENA 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.