Correlation Between Thungela Resources and Nedbank
Can any of the company-specific risk be diversified away by investing in both Thungela Resources and Nedbank 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 Nedbank 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 Nedbank Group, you can compare the effects of market volatilities on Thungela Resources and Nedbank 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 Nedbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thungela Resources and Nedbank.
Diversification Opportunities for Thungela Resources and Nedbank
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Thungela and Nedbank is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Thungela Resources Limited and Nedbank Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nedbank Group 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 Nedbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nedbank Group has no effect on the direction of Thungela Resources i.e., Thungela Resources and Nedbank go up and down completely randomly.
Pair Corralation between Thungela Resources and Nedbank
Assuming the 90 days trading horizon Thungela Resources Limited is expected to under-perform the Nedbank. In addition to that, Thungela Resources is 1.22 times more volatile than Nedbank Group. It trades about -0.05 of its total potential returns per unit of risk. Nedbank Group is currently generating about 0.01 per unit of volatility. If you would invest 2,846,300 in Nedbank Group on October 21, 2024 and sell it today you would earn a total of 3,700 from holding Nedbank Group or generate 0.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thungela Resources Limited vs. Nedbank Group
Performance |
| Timeline |
| Thungela Resources |
| Nedbank Group |
Thungela Resources and Nedbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thungela Resources and Nedbank
The main advantage of trading using opposite Thungela Resources and Nedbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thungela Resources position performs unexpectedly, Nedbank 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 Nedbank will offset losses from the drop in Nedbank's long position.| Thungela Resources vs. Frontier Transport Holdings | Thungela Resources vs. Harmony Gold Mining | Thungela Resources vs. Safari Investments RSA | Thungela Resources vs. Boxer Retail |
| Nedbank vs. Harmony Gold Mining | Nedbank vs. Brimstone Investment | Nedbank vs. Ascendis Health | Nedbank vs. MC Mining |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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