Correlation Between Banpu PCL and Ichor Coal

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

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

Diversification Opportunities for Banpu PCL and Ichor Coal

0.65

Correlation Coefficient

Banpu PCL  Ichor Coal

Poor diversification

The 3 months correlation between Banpu and Ichor is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Banpu PCL and Ichor Coal NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ichor Coal NV and Banpu PCL 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 Banpu PCL are associated (or correlated) with Ichor Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ichor Coal NV has no effect on the direction of Banpu PCL i.e., Banpu PCL and Ichor Coal go up and down completely randomly.

Pair Corralation between Banpu PCL and Ichor Coal

Assuming the 90 days trading horizon Banpu PCL is expected to generate 2.93 times more return on investment than Ichor Coal. However, Banpu PCL is 2.93 times more volatile than Ichor Coal NV. It trades about 0.0 of its potential returns per unit of risk. Ichor Coal NV is currently generating about -0.12 per unit of risk. If you would invest  35.00  in Banpu PCL on September 23, 2024 and sell it today you would lose (20.00) from holding Banpu PCL or give up 57.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.01%
Values	Daily Returns

Banpu PCL  vs.  Ichor Coal NV

Banpu PCL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banpu PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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.

Pair Trading with Banpu PCL and Ichor Coal

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

The idea behind Banpu PCL and Ichor Coal NV 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.