Correlation Between Exxaro Resources and Thungela Resources
Can any of the company-specific risk be diversified away by investing in both Exxaro Resources 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 Exxaro Resources and Thungela Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exxaro Resources and Thungela Resources Limited, you can compare the effects of market volatilities on Exxaro Resources 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 Exxaro Resources with a short position of Thungela Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxaro Resources and Thungela Resources.
Diversification Opportunities for Exxaro Resources and Thungela Resources
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Exxaro and Thungela is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Exxaro Resources and Thungela Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thungela Resources and Exxaro 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 Exxaro Resources 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 Exxaro Resources i.e., Exxaro Resources and Thungela Resources go up and down completely randomly.
Pair Corralation between Exxaro Resources and Thungela Resources
Assuming the 90 days trading horizon Exxaro Resources is expected to generate 0.74 times more return on investment than Thungela Resources. However, Exxaro Resources is 1.35 times less risky than Thungela Resources. It trades about 0.0 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 1,688,161 in Exxaro Resources on September 23, 2024 and sell it today you would lose (98,461) from holding Exxaro Resources or give up 5.83% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Exxaro Resources vs. Thungela Resources Limited
Performance |
Timeline |
Exxaro Resources |
Thungela Resources |
Exxaro Resources and Thungela Resources Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Exxaro Resources and Thungela Resources
The main advantage of trading using opposite Exxaro Resources and Thungela Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxaro Resources 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.Exxaro Resources vs. Thungela Resources Limited | Exxaro Resources vs. MC Mining | Exxaro Resources vs. Afine Investments | Exxaro Resources vs. Capitec Bank Holdings |
Thungela Resources vs. Exxaro Resources | Thungela Resources vs. MC Mining | Thungela Resources vs. Afine Investments | Thungela Resources vs. Capitec Bank Holdings |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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