Correlation Between TerraCom and Hallador Energy
Can any of the company-specific risk be diversified away by investing in both TerraCom and Hallador 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 TerraCom and Hallador Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TerraCom Limited and Hallador Energy, you can compare the effects of market volatilities on TerraCom and Hallador 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 TerraCom with a short position of Hallador Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of TerraCom and Hallador Energy.
Diversification Opportunities for TerraCom and Hallador Energy
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between TerraCom and Hallador is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding TerraCom Limited and Hallador Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hallador Energy and TerraCom 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 TerraCom Limited are associated (or correlated) with Hallador Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hallador Energy has no effect on the direction of TerraCom i.e., TerraCom and Hallador Energy go up and down completely randomly.
Pair Corralation between TerraCom and Hallador Energy
Assuming the 90 days horizon TerraCom Limited is expected to generate 2.36 times more return on investment than Hallador Energy. However, TerraCom is 2.36 times more volatile than Hallador Energy. It trades about 0.13 of its potential returns per unit of risk. Hallador Energy is currently generating about 0.11 per unit of risk. If you would invest 13.00 in TerraCom Limited on July 29, 2024 and sell it today you would earn a total of 2.00 from holding TerraCom Limited or generate 15.38% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 24.62% |
Values | Daily Returns |
TerraCom Limited vs. Hallador Energy
Performance |
Timeline |
TerraCom Limited |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Hallador Energy |
TerraCom and Hallador Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with TerraCom and Hallador Energy
The main advantage of trading using opposite TerraCom and Hallador Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TerraCom position performs unexpectedly, Hallador 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 Hallador Energy will offset losses from the drop in Hallador Energy's long position.TerraCom vs. Alliance Resource Partners | TerraCom vs. SBM Offshore NV | TerraCom vs. Everi Holdings | TerraCom vs. Eagle Point Credit |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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