Correlation Between Fair Oaks and Thungela Resources
Can any of the company-specific risk be diversified away by investing in both Fair Oaks 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 Fair Oaks and Thungela Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fair Oaks Income and Thungela Resources Limited, you can compare the effects of market volatilities on Fair Oaks 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 Fair Oaks with a short position of Thungela Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fair Oaks and Thungela Resources.
Diversification Opportunities for Fair Oaks and Thungela Resources
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fair and Thungela is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Fair Oaks Income and Thungela Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thungela Resources and Fair Oaks 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 Fair Oaks Income 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 Fair Oaks i.e., Fair Oaks and Thungela Resources go up and down completely randomly.
Pair Corralation between Fair Oaks and Thungela Resources
Assuming the 90 days trading horizon Fair Oaks Income is expected to generate 0.25 times more return on investment than Thungela Resources. However, Fair Oaks Income is 3.93 times less risky than Thungela Resources. It trades about 0.1 of its potential returns per unit of risk. Thungela Resources Limited is currently generating about -0.01 per unit of risk. If you would invest 41.00 in Fair Oaks Income on November 30, 2024 and sell it today you would earn a total of 16.00 from holding Fair Oaks Income or generate 39.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fair Oaks Income vs. Thungela Resources Limited
Performance |
| Timeline |
| Fair Oaks Income |
| Thungela Resources |
Fair Oaks and Thungela Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fair Oaks and Thungela Resources
The main advantage of trading using opposite Fair Oaks and Thungela Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fair Oaks 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.| Fair Oaks vs. Host Hotels Resorts | Fair Oaks vs. Melia Hotels | Fair Oaks vs. AMG Advanced Metallurgical | Fair Oaks vs. Beowulf Mining |
| Thungela Resources vs. Central Asia Metals | Thungela Resources vs. Cornish Metals | Thungela Resources vs. InterContinental Hotels Group | Thungela Resources vs. URU Metals |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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