Correlation Between Alpha Metallurgical and SunCoke Energy

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

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

Diversification Opportunities for Alpha Metallurgical and SunCoke Energy

0.91

Correlation Coefficient

Alpha Metallurgical  SunCoke Energy

Almost no diversification

The 3 months correlation between Alpha and SunCoke is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Metallurgical Resources and SunCoke Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunCoke Energy and Alpha Metallurgical 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 Alpha Metallurgical Resources are associated (or correlated) with SunCoke Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SunCoke Energy has no effect on the direction of Alpha Metallurgical i.e., Alpha Metallurgical and SunCoke Energy go up and down completely randomly.

Pair Corralation between Alpha Metallurgical and SunCoke Energy

Considering the 90-day investment horizon Alpha Metallurgical Resources is expected to generate 2.09 times more return on investment than SunCoke Energy. However, Alpha Metallurgical is 2.09 times more volatile than SunCoke Energy. It trades about 0.16 of its potential returns per unit of risk. SunCoke Energy is currently generating about 0.1 per unit of risk. If you would invest  21,782  in Alpha Metallurgical Resources on July 2, 2024 and sell it today you would earn a total of  2,337  from holding Alpha Metallurgical Resources or generate 10.73% return on investment over 90 days.

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

Alpha Metallurgical Resources  vs.  SunCoke Energy

Alpha Metallurgical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alpha Metallurgical Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's primary indicators remain relatively invariable which may send shares a bit higher in October 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

SunCoke Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SunCoke Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Alpha Metallurgical and SunCoke Energy

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

The idea behind Alpha Metallurgical Resources and SunCoke 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.

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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.