Correlation Between Thungela Resources and Capital Drilling
Can any of the company-specific risk be diversified away by investing in both Thungela Resources and Capital Drilling 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 Capital Drilling 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 Capital Drilling, you can compare the effects of market volatilities on Thungela Resources and Capital Drilling 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 Capital Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thungela Resources and Capital Drilling.
Diversification Opportunities for Thungela Resources and Capital Drilling
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Thungela and Capital is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Thungela Resources Limited and Capital Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Drilling 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 Capital Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Drilling has no effect on the direction of Thungela Resources i.e., Thungela Resources and Capital Drilling go up and down completely randomly.
Pair Corralation between Thungela Resources and Capital Drilling
Assuming the 90 days trading horizon Thungela Resources Limited is expected to under-perform the Capital Drilling. In addition to that, Thungela Resources is 1.25 times more volatile than Capital Drilling. It trades about -0.37 of its total potential returns per unit of risk. Capital Drilling is currently generating about -0.01 per unit of volatility. If you would invest 7,560 in Capital Drilling on December 1, 2024 and sell it today you would lose (60.00) from holding Capital Drilling or give up 0.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Thungela Resources Limited vs. Capital Drilling
Performance |
| Timeline |
| Thungela Resources |
| Capital Drilling |
Thungela Resources and Capital Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thungela Resources and Capital Drilling
The main advantage of trading using opposite Thungela Resources and Capital Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thungela Resources position performs unexpectedly, Capital Drilling 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 Capital Drilling will offset losses from the drop in Capital Drilling's long position.| Thungela Resources vs. Cornish Metals | Thungela Resources vs. Critical Metals Plc | Thungela Resources vs. Tetragon Financial Group | Thungela Resources vs. Blackrock World Mining |
| Capital Drilling vs. Molson Coors Beverage | Capital Drilling vs. Naked Wines plc | Capital Drilling vs. Micron Technology | Capital Drilling vs. Logitech International SA |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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