Correlation Between Baker Steel and Thungela Resources
Can any of the company-specific risk be diversified away by investing in both Baker Steel 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 Baker Steel and Thungela Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baker Steel Resources and Thungela Resources Limited, you can compare the effects of market volatilities on Baker Steel 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 Baker Steel with a short position of Thungela Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baker Steel and Thungela Resources.
Diversification Opportunities for Baker Steel and Thungela Resources
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Baker and Thungela is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Baker Steel Resources and Thungela Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thungela Resources and Baker Steel 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 Baker Steel Resources 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 Baker Steel i.e., Baker Steel and Thungela Resources go up and down completely randomly.
Pair Corralation between Baker Steel and Thungela Resources
Assuming the 90 days trading horizon Baker Steel Resources is expected to generate 0.74 times more return on investment than Thungela Resources. However, Baker Steel Resources is 1.35 times less risky than Thungela Resources. It trades about 0.4 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 4,750 in Baker Steel Resources on September 1, 2024 and sell it today you would earn a total of 1,050 from holding Baker Steel Resources or generate 22.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Baker Steel Resources vs. Thungela Resources Limited
Performance |
| Timeline |
| Baker Steel Resources |
| Thungela Resources |
Baker Steel and Thungela Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baker Steel and Thungela Resources
The main advantage of trading using opposite Baker Steel and Thungela Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baker Steel 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.| Baker Steel vs. Flutter Entertainment PLC | Baker Steel vs. Everyman Media Group | Baker Steel vs. Molson Coors Beverage | Baker Steel vs. G5 Entertainment AB |
| Thungela Resources vs. Fair Oaks Income | Thungela Resources vs. Zanaga Iron Ore | Thungela Resources vs. Veolia Environnement VE | Thungela Resources vs. Baker Steel Resources |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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