Correlation Between FC Investment and Thungela Resources
Can any of the company-specific risk be diversified away by investing in both FC Investment 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 FC Investment and Thungela Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FC Investment Trust and Thungela Resources Limited, you can compare the effects of market volatilities on FC Investment 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 FC Investment with a short position of Thungela Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of FC Investment and Thungela Resources.
Diversification Opportunities for FC Investment and Thungela Resources
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between FCIT and Thungela is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding FC Investment Trust and Thungela Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thungela Resources and FC Investment 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 FC Investment Trust 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 FC Investment i.e., FC Investment and Thungela Resources go up and down completely randomly.
Pair Corralation between FC Investment and Thungela Resources
Assuming the 90 days trading horizon FC Investment Trust is expected to generate 0.23 times more return on investment than Thungela Resources. However, FC Investment Trust is 4.33 times less risky than Thungela Resources. It trades about 0.46 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 104,400 in FC Investment Trust on September 1, 2024 and sell it today you would earn a total of 7,800 from holding FC Investment Trust or generate 7.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
FC Investment Trust vs. Thungela Resources Limited
Performance |
| Timeline |
| FC Investment Trust |
| Thungela Resources |
FC Investment and Thungela Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FC Investment and Thungela Resources
The main advantage of trading using opposite FC Investment and Thungela Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FC Investment 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.| FC Investment vs. Toyota Motor Corp | FC Investment vs. SoftBank Group Corp | FC Investment vs. OTP Bank Nyrt | FC Investment vs. Las Vegas Sands |
| 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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