Correlation Between Datatec and Thungela Resources
Can any of the company-specific risk be diversified away by investing in both Datatec 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 Datatec and Thungela Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Datatec and Thungela Resources Limited, you can compare the effects of market volatilities on Datatec 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 Datatec with a short position of Thungela Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Datatec and Thungela Resources.
Diversification Opportunities for Datatec and Thungela Resources
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Datatec and Thungela is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Datatec and Thungela Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thungela Resources and Datatec 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 Datatec 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 Datatec i.e., Datatec and Thungela Resources go up and down completely randomly.
Pair Corralation between Datatec and Thungela Resources
Assuming the 90 days trading horizon Datatec is expected to generate 0.73 times more return on investment than Thungela Resources. However, Datatec is 1.37 times less risky than Thungela Resources. It trades about 0.04 of its potential returns per unit of risk. Thungela Resources Limited is currently generating about 0.02 per unit of risk. If you would invest 364,372 in Datatec on August 31, 2024 and sell it today you would earn a total of 70,828 from holding Datatec or generate 19.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Datatec vs. Thungela Resources Limited
Performance |
| Timeline |
| Datatec |
| Thungela Resources |
Datatec and Thungela Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Datatec and Thungela Resources
The main advantage of trading using opposite Datatec and Thungela Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Datatec 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.| Datatec vs. Bytes Technology | Datatec vs. Life Healthcare | Datatec vs. Astral Foods | Datatec vs. Lesaka Technologies |
| Thungela Resources vs. Lesaka Technologies | Thungela Resources vs. Standard Bank Group | Thungela Resources vs. Datatec | Thungela Resources vs. HomeChoice Investments |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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