Correlation Between Afine Investments and Thungela Resources

Can any of the company-specific risk be diversified away by investing in both Afine Investments 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 Afine Investments and Thungela Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Afine Investments and Thungela Resources Limited, you can compare the effects of market volatilities on Afine Investments 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 Afine Investments with a short position of Thungela Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Afine Investments and Thungela Resources.

Diversification Opportunities for Afine Investments and Thungela Resources

-0.27

Correlation Coefficient

Afine Investments  Thungela Resources

Very good diversification

The 3 months correlation between Afine and Thungela is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Afine Investments and Thungela Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thungela Resources and Afine Investments 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 Afine Investments 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 Afine Investments i.e., Afine Investments and Thungela Resources go up and down completely randomly.

Pair Corralation between Afine Investments and Thungela Resources

Assuming the 90 days trading horizon Afine Investments is expected to generate 46.85 times more return on investment than Thungela Resources. However, Afine Investments is 46.85 times more volatile than Thungela Resources Limited. It trades about 0.11 of its potential returns per unit of risk. Thungela Resources Limited is currently generating about -0.01 per unit of risk. If you would invest  31,021  in Afine Investments on September 23, 2024 and sell it today you would earn a total of  9,079  from holding Afine Investments or generate 29.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Afine Investments  vs.  Thungela Resources Limited

Afine Investments

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Afine Investments are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Afine Investments exhibited solid returns over the last few months and may actually be approaching a breakup point.

Thungela Resources

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Thungela Resources Limited are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Thungela Resources exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Afine Investments and Thungela Resources

The main advantage of trading using opposite Afine Investments and Thungela Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Afine Investments 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.

The idea behind Afine Investments and Thungela Resources Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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.