Correlation Between Thungela Resources and Zanaga Iron
Can any of the company-specific risk be diversified away by investing in both Thungela Resources and Zanaga Iron 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 Zanaga Iron 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 Zanaga Iron Ore, you can compare the effects of market volatilities on Thungela Resources and Zanaga Iron 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 Zanaga Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thungela Resources and Zanaga Iron.
Diversification Opportunities for Thungela Resources and Zanaga Iron
-0.92 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Thungela and Zanaga is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Thungela Resources Limited and Zanaga Iron Ore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zanaga Iron Ore 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 Zanaga Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zanaga Iron Ore has no effect on the direction of Thungela Resources i.e., Thungela Resources and Zanaga Iron go up and down completely randomly.
Pair Corralation between Thungela Resources and Zanaga Iron
Assuming the 90 days trading horizon Thungela Resources Limited is expected to generate 0.53 times more return on investment than Zanaga Iron. However, Thungela Resources Limited is 1.89 times less risky than Zanaga Iron. It trades about 0.0 of its potential returns per unit of risk. Zanaga Iron Ore is currently generating about -0.01 per unit of risk. If you would invest 61,361 in Thungela Resources Limited on September 4, 2024 and sell it today you would lose (6,511) from holding Thungela Resources Limited or give up 10.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thungela Resources Limited vs. Zanaga Iron Ore
Performance |
| Timeline |
| Thungela Resources |
| Zanaga Iron Ore |
Thungela Resources and Zanaga Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thungela Resources and Zanaga Iron
The main advantage of trading using opposite Thungela Resources and Zanaga Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thungela Resources position performs unexpectedly, Zanaga Iron 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 Zanaga Iron will offset losses from the drop in Zanaga Iron's long position.| Thungela Resources vs. Zegona Communications Plc | Thungela Resources vs. Orient Telecoms | Thungela Resources vs. Gamma Communications PLC | Thungela Resources vs. Litigation Capital Management |
| Zanaga Iron vs. Ion Beam Applications | Zanaga Iron vs. United Utilities Group | Zanaga Iron vs. Roadside Real Estate | Zanaga Iron vs. Vitec Software Group |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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