Correlation Between Thungela Resources and Rex Trueform
Can any of the company-specific risk be diversified away by investing in both Thungela Resources and Rex Trueform 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 Rex Trueform 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 Rex Trueform Group, you can compare the effects of market volatilities on Thungela Resources and Rex Trueform 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 Rex Trueform. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thungela Resources and Rex Trueform.
Diversification Opportunities for Thungela Resources and Rex Trueform
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Thungela and Rex is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Thungela Resources Limited and Rex Trueform Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rex Trueform 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 Rex Trueform. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rex Trueform Group has no effect on the direction of Thungela Resources i.e., Thungela Resources and Rex Trueform go up and down completely randomly.
Pair Corralation between Thungela Resources and Rex Trueform
Assuming the 90 days trading horizon Thungela Resources Limited is expected to under-perform the Rex Trueform. In addition to that, Thungela Resources is 52.35 times more volatile than Rex Trueform Group. It trades about -0.05 of its total potential returns per unit of risk. Rex Trueform Group is currently generating about -0.13 per unit of volatility. If you would invest 112,800 in Rex Trueform Group on September 24, 2024 and sell it today you would lose (100.00) from holding Rex Trueform Group or give up 0.09% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 95.0% |
Values | Daily Returns |
Thungela Resources Limited vs. Rex Trueform Group
Performance |
Timeline |
Thungela Resources |
Rex Trueform Group |
Thungela Resources and Rex Trueform Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Thungela Resources and Rex Trueform
The main advantage of trading using opposite Thungela Resources and Rex Trueform positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thungela Resources position performs unexpectedly, Rex Trueform 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 Rex Trueform will offset losses from the drop in Rex Trueform's 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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