Correlation Between Granprade and Thungela Resources

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

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

Diversification Opportunities for Granprade and Thungela Resources

0.86

Correlation Coefficient

Granprade  Thungela Resources

Very poor diversification

The 3 months correlation between Granprade and Thungela is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Granprade and Thungela Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thungela Resources and Granprade 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 Granprade 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 Granprade i.e., Granprade and Thungela Resources go up and down completely randomly.

Pair Corralation between Granprade and Thungela Resources

Assuming the 90 days trading horizon Granprade is expected to generate 0.98 times more return on investment than Thungela Resources. However, Granprade is 1.02 times less risky than Thungela Resources. It trades about -0.09 of its potential returns per unit of risk. Thungela Resources Limited is currently generating about -0.12 per unit of risk. If you would invest  34,000  in Granprade on December 29, 2024 and sell it today you would lose (4,200) from holding Granprade or give up 12.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Granprade  vs.  Thungela Resources Limited

Granprade

Risk-Adjusted Performance

Very Weak

Over the last 90 days Granprade has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Thungela Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thungela Resources Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Granprade and Thungela Resources

The main advantage of trading using opposite Granprade and Thungela Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granprade 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 Granprade 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.