Correlation Between Zanaga Iron and Thungela Resources
Can any of the company-specific risk be diversified away by investing in both Zanaga Iron and Thungela Resources 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 Zanaga Iron and Thungela Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zanaga Iron Ore and Thungela Resources Limited, you can compare the effects of market volatilities on Zanaga Iron and Thungela Resources 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 Zanaga Iron with a short position of Thungela Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zanaga Iron and Thungela Resources.
Diversification Opportunities for Zanaga Iron and Thungela Resources
-0.92 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Zanaga and Thungela is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Zanaga Iron Ore and Thungela Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thungela Resources and Zanaga Iron 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 Zanaga Iron Ore are associated (or correlated) with Thungela Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thungela Resources has no effect on the direction of Zanaga Iron i.e., Zanaga Iron and Thungela Resources go up and down completely randomly.
Pair Corralation between Zanaga Iron and Thungela Resources
Assuming the 90 days trading horizon Zanaga Iron Ore is expected to under-perform the Thungela Resources. In addition to that, Zanaga Iron is 1.19 times more volatile than Thungela Resources Limited. It trades about -0.12 of its total potential returns per unit of risk. Thungela Resources Limited is currently generating about 0.03 per unit of volatility. If you would invest 55,400 in Thungela Resources Limited on September 1, 2024 and sell it today you would earn a total of 700.00 from holding Thungela Resources Limited or generate 1.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Zanaga Iron Ore vs. Thungela Resources Limited
Performance |
| Timeline |
| Zanaga Iron Ore |
| Thungela Resources |
Zanaga Iron and Thungela Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zanaga Iron and Thungela Resources
The main advantage of trading using opposite Zanaga Iron and Thungela Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zanaga Iron position performs unexpectedly, Thungela Resources 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 Thungela Resources will offset losses from the drop in Thungela Resources' long position.| Zanaga Iron vs. Givaudan SA | Zanaga Iron vs. Antofagasta PLC | Zanaga Iron vs. Centamin PLC | Zanaga Iron vs. Atalaya Mining |
| Thungela Resources vs. Fair Oaks Income | Thungela Resources vs. Zanaga Iron Ore | Thungela Resources vs. Veolia Environnement VE | Thungela Resources vs. Baker Steel Resources |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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