Correlation Between Thungela Resources and Anglo American
Can any of the company-specific risk be diversified away by investing in both Thungela Resources and Anglo American 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 Thungela Resources and Anglo American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thungela Resources Limited and Anglo American Platinum, you can compare the effects of market volatilities on Thungela Resources and Anglo American 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 Thungela Resources with a short position of Anglo American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thungela Resources and Anglo American.
Diversification Opportunities for Thungela Resources and Anglo American
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Thungela and Anglo is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Thungela Resources Limited and Anglo American Platinum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anglo American Platinum and Thungela 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 Thungela Resources Limited are associated (or correlated) with Anglo American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anglo American Platinum has no effect on the direction of Thungela Resources i.e., Thungela Resources and Anglo American go up and down completely randomly.
Pair Corralation between Thungela Resources and Anglo American
Assuming the 90 days trading horizon Thungela Resources Limited is expected to generate 0.57 times more return on investment than Anglo American. However, Thungela Resources Limited is 1.75 times less risky than Anglo American. It trades about 0.25 of its potential returns per unit of risk. Anglo American Platinum is currently generating about -0.03 per unit of risk. If you would invest 1,093,500 in Thungela Resources Limited on August 28, 2024 and sell it today you would earn a total of 263,100 from holding Thungela Resources Limited or generate 24.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thungela Resources Limited vs. Anglo American Platinum
Performance |
| Timeline |
| Thungela Resources |
| Anglo American Platinum |
Thungela Resources and Anglo American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thungela Resources and Anglo American
The main advantage of trading using opposite Thungela Resources and Anglo American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thungela Resources position performs unexpectedly, Anglo American 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 Anglo American will offset losses from the drop in Anglo American's long position.| Thungela Resources vs. Centaur Bci Balanced | Thungela Resources vs. Growthpoint Properties | Thungela Resources vs. Bowler Metcalf | Thungela Resources vs. Shoprite Holdings |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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