Correlation Between Thungela Resources and Whitehaven Coal
Can any of the company-specific risk be diversified away by investing in both Thungela Resources and Whitehaven Coal 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 Whitehaven Coal 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 Whitehaven Coal Limited, you can compare the effects of market volatilities on Thungela Resources and Whitehaven Coal 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 Whitehaven Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thungela Resources and Whitehaven Coal.
Diversification Opportunities for Thungela Resources and Whitehaven Coal
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Thungela and Whitehaven is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Thungela Resources Limited and Whitehaven Coal Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitehaven Coal 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 Whitehaven Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whitehaven Coal has no effect on the direction of Thungela Resources i.e., Thungela Resources and Whitehaven Coal go up and down completely randomly.
Pair Corralation between Thungela Resources and Whitehaven Coal
Assuming the 90 days horizon Thungela Resources Limited is expected to under-perform the Whitehaven Coal. In addition to that, Thungela Resources is 1.5 times more volatile than Whitehaven Coal Limited. It trades about 0.0 of its total potential returns per unit of risk. Whitehaven Coal Limited is currently generating about 0.0 per unit of volatility. If you would invest 507.00 in Whitehaven Coal Limited on August 31, 2024 and sell it today you would lose (81.00) from holding Whitehaven Coal Limited or give up 15.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 93.08% |
| Values | Daily Returns |
Thungela Resources Limited vs. Whitehaven Coal Limited
Performance |
| Timeline |
| Thungela Resources |
| Whitehaven Coal |
Thungela Resources and Whitehaven Coal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thungela Resources and Whitehaven Coal
The main advantage of trading using opposite Thungela Resources and Whitehaven Coal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thungela Resources position performs unexpectedly, Whitehaven Coal 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 Whitehaven Coal will offset losses from the drop in Whitehaven Coal's long position.| Thungela Resources vs. Adaro Energy Tbk | Thungela Resources vs. Geo Energy Resources | Thungela Resources vs. Bukit Asam Tbk | Thungela Resources vs. New Hope |
| Whitehaven Coal vs. New Hope | Whitehaven Coal vs. Adaro Energy Tbk | Whitehaven Coal vs. Thungela Resources Limited | Whitehaven Coal vs. Yancoal Australia |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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