Correlation Between TerraCom and Thungela Resources
Can any of the company-specific risk be diversified away by investing in both TerraCom 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 TerraCom and Thungela Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TerraCom Limited and Thungela Resources Limited, you can compare the effects of market volatilities on TerraCom 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 TerraCom with a short position of Thungela Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of TerraCom and Thungela Resources.
Diversification Opportunities for TerraCom and Thungela Resources
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between TerraCom and Thungela is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding TerraCom 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 TerraCom 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 TerraCom 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 TerraCom i.e., TerraCom and Thungela Resources go up and down completely randomly.
Pair Corralation between TerraCom and Thungela Resources
Assuming the 90 days horizon TerraCom Limited is expected to under-perform the Thungela Resources. In addition to that, TerraCom is 2.58 times more volatile than Thungela Resources Limited. It trades about -0.45 of its total potential returns per unit of risk. Thungela Resources Limited is currently generating about 0.02 per unit of volatility. If you would invest 705.00 in Thungela Resources Limited on November 2, 2024 and sell it today you would earn a total of 1.00 from holding Thungela Resources Limited or generate 0.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 35.71% |
| Values | Daily Returns |
TerraCom Limited vs. Thungela Resources Limited
Performance |
| Timeline |
| TerraCom Limited |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
| Thungela Resources |
TerraCom and Thungela Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TerraCom and Thungela Resources
The main advantage of trading using opposite TerraCom and Thungela Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TerraCom 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.| TerraCom vs. Indo Tambangraya Megah | TerraCom vs. Adaro Energy Tbk | TerraCom vs. Thungela Resources Limited | TerraCom vs. China Coal Energy |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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