Correlation Between Exxaro Resources and Thungela Resources
Can any of the company-specific risk be diversified away by investing in both Exxaro Resources 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 Exxaro Resources and Thungela Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exxaro Resources Limited and Thungela Resources Limited, you can compare the effects of market volatilities on Exxaro Resources 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 Exxaro Resources with a short position of Thungela Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxaro Resources and Thungela Resources.
Diversification Opportunities for Exxaro Resources and Thungela Resources
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Exxaro and Thungela is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Exxaro Resources Limited and Thungela Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thungela Resources and Exxaro Resources 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 Exxaro Resources Limited 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 Exxaro Resources i.e., Exxaro Resources and Thungela Resources go up and down completely randomly.
Pair Corralation between Exxaro Resources and Thungela Resources
Assuming the 90 days horizon Exxaro Resources Limited is expected to generate 1.86 times more return on investment than Thungela Resources. However, Exxaro Resources is 1.86 times more volatile than Thungela Resources Limited. It trades about 0.22 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 733.00 in Exxaro Resources Limited on August 31, 2024 and sell it today you would earn a total of 317.00 from holding Exxaro Resources Limited or generate 43.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 8.57% |
| Values | Daily Returns |
Exxaro Resources Limited vs. Thungela Resources Limited
Performance |
| Timeline |
| Exxaro Resources |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Thungela Resources |
Exxaro Resources and Thungela Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxaro Resources and Thungela Resources
The main advantage of trading using opposite Exxaro Resources and Thungela Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxaro Resources 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.| Exxaro Resources vs. Yancoal Australia | Exxaro Resources vs. China Coal Energy | Exxaro Resources vs. Bukit Asam Tbk | Exxaro Resources vs. Indo Tambangraya Megah |
| Thungela Resources vs. Adaro Energy Tbk | Thungela Resources vs. Geo Energy Resources | Thungela Resources vs. Bukit Asam Tbk | Thungela Resources vs. New Hope |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |