Correlation Between Thungela Resources and Blue Label
Can any of the company-specific risk be diversified away by investing in both Thungela Resources and Blue Label 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 Blue Label 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 Blue Label Telecoms, you can compare the effects of market volatilities on Thungela Resources and Blue Label 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 Blue Label. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thungela Resources and Blue Label.
Diversification Opportunities for Thungela Resources and Blue Label
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Thungela and Blue is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Thungela Resources Limited and Blue Label Telecoms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Label Telecoms 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 Blue Label. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Label Telecoms has no effect on the direction of Thungela Resources i.e., Thungela Resources and Blue Label go up and down completely randomly.
Pair Corralation between Thungela Resources and Blue Label
Assuming the 90 days trading horizon Thungela Resources Limited is expected to generate 2.23 times more return on investment than Blue Label. However, Thungela Resources is 2.23 times more volatile than Blue Label Telecoms. It trades about 0.11 of its potential returns per unit of risk. Blue Label Telecoms is currently generating about -0.37 per unit of risk. If you would invest 1,304,900 in Thungela Resources Limited on August 28, 2024 and sell it today you would earn a total of 57,000 from holding Thungela Resources Limited or generate 4.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thungela Resources Limited vs. Blue Label Telecoms
Performance |
| Timeline |
| Thungela Resources |
| Blue Label Telecoms |
Thungela Resources and Blue Label Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thungela Resources and Blue Label
The main advantage of trading using opposite Thungela Resources and Blue Label positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thungela Resources position performs unexpectedly, Blue Label 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 Blue Label will offset losses from the drop in Blue Label's long position.| Thungela Resources vs. Lesaka Technologies | Thungela Resources vs. Safari Investments RSA | Thungela Resources vs. E Media Holdings | Thungela Resources vs. HomeChoice Investments |
| Blue Label vs. Harmony Gold Mining | Blue Label vs. Capitec Bank Holdings | Blue Label vs. Safari Investments RSA | Blue Label vs. Reinet Investments SCA |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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