Correlation Between Whitehaven Coal and Stelar Metals

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

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

Diversification Opportunities for Whitehaven Coal and Stelar Metals

0.7

Correlation Coefficient

Whitehaven Coal  Stelar Metals

Poor diversification

The 3 months correlation between Whitehaven and Stelar is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Whitehaven Coal and Stelar Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stelar Metals and Whitehaven 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 Whitehaven Coal are associated (or correlated) with Stelar Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stelar Metals has no effect on the direction of Whitehaven Coal i.e., Whitehaven Coal and Stelar Metals go up and down completely randomly.

Pair Corralation between Whitehaven Coal and Stelar Metals

Assuming the 90 days trading horizon Whitehaven Coal is expected to generate 0.62 times more return on investment than Stelar Metals. However, Whitehaven Coal is 1.62 times less risky than Stelar Metals. It trades about -0.13 of its potential returns per unit of risk. Stelar Metals is currently generating about -0.08 per unit of risk. If you would invest  633.00  in Whitehaven Coal on October 10, 2024 and sell it today you would lose (32.00) from holding Whitehaven Coal or give up 5.06% of portfolio value over 90 days.

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

Whitehaven Coal  vs.  Stelar Metals

Whitehaven Coal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Whitehaven Coal 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 fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Stelar Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stelar Metals 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 fundamental drivers remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Whitehaven Coal and Stelar Metals

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

The idea behind Whitehaven Coal and Stelar Metals 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.