Correlation Between Copa Holdings and China Coal
Can any of the company-specific risk be diversified away by investing in both Copa Holdings and China 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 Copa Holdings and China Coal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Copa Holdings SA and China Coal Energy, you can compare the effects of market volatilities on Copa Holdings and China 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 Copa Holdings with a short position of China Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Copa Holdings and China Coal.
Diversification Opportunities for Copa Holdings and China Coal
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Copa and China is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Copa Holdings SA and China Coal Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Coal Energy and Copa Holdings 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 Copa Holdings SA are associated (or correlated) with China Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Coal Energy has no effect on the direction of Copa Holdings i.e., Copa Holdings and China Coal go up and down completely randomly.
Pair Corralation between Copa Holdings and China Coal
Assuming the 90 days horizon Copa Holdings SA is expected to generate 0.69 times more return on investment than China Coal. However, Copa Holdings SA is 1.45 times less risky than China Coal. It trades about 0.1 of its potential returns per unit of risk. China Coal Energy is currently generating about -0.03 per unit of risk. If you would invest 8,790 in Copa Holdings SA on February 20, 2024 and sell it today you would earn a total of 1,060 from holding Copa Holdings SA or generate 12.06% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Copa Holdings SA vs. China Coal Energy
Performance |
Timeline |
Copa Holdings SA |
China Coal Energy |
Copa Holdings and China Coal Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Copa Holdings and China Coal
The main advantage of trading using opposite Copa Holdings and China Coal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copa Holdings position performs unexpectedly, China 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 China Coal will offset losses from the drop in China Coal's long position.Copa Holdings vs. RYANAIR HLDGS ADR | Copa Holdings vs. Southwest Airlines Co | Copa Holdings vs. Ryanair Holdings plc | Copa Holdings vs. Superior Plus Corp |
China Coal vs. CHINA SHENHUA ENA | China Coal vs. Banpu PCL | China Coal vs. CONSOL Energy | China Coal vs. HMS Bergbau AG |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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