Correlation Analysis

Analyzed monthly data from Bloomberg spanning 10 years (July 2012 to June 2022) to determine the correlation between Exxaro Ltd.’s share price and coal prices, USD/ZAR exchange rates.

• Hypotheses: H0 (No correlation), H1 (Positive correlation), H2 (Negative correlation).

• Executed statistical techniques, including Pearson correlation and simple linear regression.

• Identified a moderate positive correlation (r = 0.55) between Exxaro Ltd.’s share price and coal prices.

• Supported H1 with evidence that higher coal prices correspond to increased share prices.

• Regression analysis reinforced findings with positive coal/ZAR coefficient (0.026) and negative USD/ZAR coefficient (-6.56).

Results: Showcased a statistically significant correlation, rejecting H0 and providing evidence against H2, suggesting a negative correlation.