Correlation Between Summit Materials and Thungela Resources
Can any of the company-specific risk be diversified away by investing in both Summit Materials and Thungela Resources 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 Summit Materials and Thungela Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials Cl and Thungela Resources Limited, you can compare the effects of market volatilities on Summit Materials and Thungela Resources 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 Summit Materials with a short position of Thungela Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Thungela Resources.
Diversification Opportunities for Summit Materials and Thungela Resources
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Summit and Thungela is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials Cl and Thungela Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thungela Resources and Summit Materials 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 Summit Materials Cl are associated (or correlated) with Thungela Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thungela Resources has no effect on the direction of Summit Materials i.e., Summit Materials and Thungela Resources go up and down completely randomly.
Pair Corralation between Summit Materials and Thungela Resources
Assuming the 90 days trading horizon Summit Materials Cl is expected to generate 0.83 times more return on investment than Thungela Resources. However, Summit Materials Cl is 1.21 times less risky than Thungela Resources. It trades about 0.06 of its potential returns per unit of risk. Thungela Resources Limited is currently generating about 0.03 per unit of risk. If you would invest 3,542 in Summit Materials Cl on September 12, 2024 and sell it today you would earn a total of 1,549 from holding Summit Materials Cl or generate 43.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.4% |
| Values | Daily Returns |
Summit Materials Cl vs. Thungela Resources Limited
Performance |
| Timeline |
| Summit Materials |
| Thungela Resources |
Summit Materials and Thungela Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and Thungela Resources
The main advantage of trading using opposite Summit Materials and Thungela Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, Thungela Resources 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 Thungela Resources will offset losses from the drop in Thungela Resources' long position.| Summit Materials vs. Hong Kong Land | Summit Materials vs. Neometals | Summit Materials vs. Coor Service Management | Summit Materials vs. Fidelity Sustainable USD |
| Thungela Resources vs. Silvercorp Metals | Thungela Resources vs. Lundin Mining Corp | Thungela Resources vs. Blackrock World Mining | Thungela Resources vs. Summit Materials Cl |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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