Correlation Between Ramaco Resources and SunCoke Energy

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

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

Diversification Opportunities for Ramaco Resources and SunCoke Energy

0.35

Correlation Coefficient

Ramaco Resources  SunCoke Energy

Weak diversification

The 3 months correlation between Ramaco and SunCoke is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Ramaco Resources and SunCoke Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunCoke Energy and Ramaco Resources 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 Ramaco 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 Ramaco Resources i.e., Ramaco Resources and SunCoke Energy go up and down completely randomly.

Pair Corralation between Ramaco Resources and SunCoke Energy

Assuming the 90 days horizon Ramaco Resources is expected to under-perform the SunCoke Energy. In addition to that, Ramaco Resources is 1.06 times more volatile than SunCoke Energy. It trades about -0.03 of its total potential returns per unit of risk. SunCoke Energy is currently generating about 0.07 per unit of volatility. If you would invest  876.00  in SunCoke Energy on August 19, 2024 and sell it today you would earn a total of  347.00  from holding SunCoke Energy or generate 39.61% return on investment over 90 days.

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

Ramaco Resources  vs.  SunCoke Energy

Ramaco Resources

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ramaco Resources are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Ramaco Resources is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

SunCoke Energy

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SunCoke Energy are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, SunCoke Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ramaco Resources and SunCoke Energy

The main advantage of trading using opposite Ramaco Resources and SunCoke Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ramaco Resources 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 Ramaco 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.

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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.