Correlation Between Thungela Resources and Gemfields
Can any of the company-specific risk be diversified away by investing in both Thungela Resources and Gemfields 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 Gemfields 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 Gemfields Group, you can compare the effects of market volatilities on Thungela Resources and Gemfields 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 Gemfields. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thungela Resources and Gemfields.
Diversification Opportunities for Thungela Resources and Gemfields
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Thungela and Gemfields is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Thungela Resources Limited and Gemfields Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gemfields Group 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 Gemfields. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gemfields Group has no effect on the direction of Thungela Resources i.e., Thungela Resources and Gemfields go up and down completely randomly.
Pair Corralation between Thungela Resources and Gemfields
Assuming the 90 days trading horizon Thungela Resources Limited is expected to generate 0.29 times more return on investment than Gemfields. However, Thungela Resources Limited is 3.42 times less risky than Gemfields. It trades about -0.05 of its potential returns per unit of risk. Gemfields Group is currently generating about -0.15 per unit of risk. If you would invest 1,361,900 in Thungela Resources Limited on September 24, 2024 and sell it today you would lose (27,400) from holding Thungela Resources Limited or give up 2.01% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Thungela Resources Limited vs. Gemfields Group
Performance |
Timeline |
Thungela Resources |
Gemfields Group |
Thungela Resources and Gemfields Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Thungela Resources and Gemfields
The main advantage of trading using opposite Thungela Resources and Gemfields positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thungela Resources position performs unexpectedly, Gemfields 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 Gemfields will offset losses from the drop in Gemfields' long position.Thungela Resources vs. Exxaro Resources | Thungela Resources vs. MC Mining | Thungela Resources vs. Afine Investments | Thungela Resources vs. Capitec Bank Holdings |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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