Correlation Between Orient Telecoms and Thungela Resources
Can any of the company-specific risk be diversified away by investing in both Orient Telecoms 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 Orient Telecoms and Thungela Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orient Telecoms and Thungela Resources Limited, you can compare the effects of market volatilities on Orient Telecoms 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 Orient Telecoms with a short position of Thungela Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orient Telecoms and Thungela Resources.
Diversification Opportunities for Orient Telecoms and Thungela Resources
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Orient and Thungela is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Orient Telecoms and Thungela Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thungela Resources and Orient Telecoms 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 Orient Telecoms 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 Orient Telecoms i.e., Orient Telecoms and Thungela Resources go up and down completely randomly.
Pair Corralation between Orient Telecoms and Thungela Resources
Assuming the 90 days trading horizon Orient Telecoms is expected to under-perform the Thungela Resources. But the stock apears to be less risky and, when comparing its historical volatility, Orient Telecoms is 1.97 times less risky than Thungela Resources. The stock trades about -0.06 of its potential returns per unit of risk. The Thungela Resources Limited is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 99,580 in Thungela Resources Limited on September 12, 2024 and sell it today you would lose (43,980) from holding Thungela Resources Limited or give up 44.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.4% |
| Values | Daily Returns |
Orient Telecoms vs. Thungela Resources Limited
Performance |
| Timeline |
| Orient Telecoms |
| Thungela Resources |
Orient Telecoms and Thungela Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orient Telecoms and Thungela Resources
The main advantage of trading using opposite Orient Telecoms and Thungela Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orient Telecoms 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.| Orient Telecoms vs. Catalyst Media Group | Orient Telecoms vs. CATLIN GROUP | Orient Telecoms vs. Tamburi Investment Partners | Orient Telecoms vs. Magnora ASA |
| Thungela Resources vs. Silvercorp Metals | Thungela Resources vs. Lundin Mining Corp | Thungela Resources vs. Blackrock World Mining | Thungela Resources vs. Summit Materials Cl |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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