Correlation Between Whitehaven Coal and ECHO INVESTMENT

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

By analyzing existing cross correlation between Whitehaven Coal Limited and ECHO INVESTMENT ZY, you can compare the effects of market volatilities on Whitehaven Coal and ECHO INVESTMENT 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 ECHO INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Whitehaven Coal and ECHO INVESTMENT.

Diversification Opportunities for Whitehaven Coal and ECHO INVESTMENT

0.0

Correlation Coefficient

Whitehaven Coal  ECHO INVESTMENT

Pay attention - limited upside

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

Pair Corralation between Whitehaven Coal and ECHO INVESTMENT

If you would invest  97.00  in ECHO INVESTMENT ZY on September 29, 2024 and sell it today you would earn a total of  12.00  from holding ECHO INVESTMENT ZY or generate 12.37% return on investment over 90 days.

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

Whitehaven Coal Limited  vs.  ECHO INVESTMENT ZY

Whitehaven Coal

Risk-Adjusted Performance

0 of 100

Very Weak

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

ECHO INVESTMENT ZY

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ECHO INVESTMENT ZY are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ECHO INVESTMENT reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Whitehaven Coal and ECHO INVESTMENT

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

The idea behind Whitehaven Coal Limited and ECHO INVESTMENT ZY 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.