Correlation Between Thungela Resources and Workforce Holdings

Can any of the company-specific risk be diversified away by investing in both Thungela Resources and Workforce Holdings 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 Workforce Holdings 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 Workforce Holdings, you can compare the effects of market volatilities on Thungela Resources and Workforce Holdings 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 Workforce Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thungela Resources and Workforce Holdings.

Diversification Opportunities for Thungela Resources and Workforce Holdings

-0.8

Correlation Coefficient

Thungela Resources  Workforce Holdings

Pay attention - limited upside

The 3 months correlation between Thungela and Workforce is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Thungela Resources Limited and Workforce Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Workforce Holdings 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 Workforce Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Workforce Holdings has no effect on the direction of Thungela Resources i.e., Thungela Resources and Workforce Holdings go up and down completely randomly.

Pair Corralation between Thungela Resources and Workforce Holdings

Assuming the 90 days trading horizon Thungela Resources Limited is expected to under-perform the Workforce Holdings. In addition to that, Thungela Resources is 11.88 times more volatile than Workforce Holdings. It trades about -0.05 of its total potential returns per unit of risk. Workforce Holdings is currently generating about 0.23 per unit of volatility. If you would invest  14,500  in Workforce Holdings on September 24, 2024 and sell it today you would earn a total of  100.00  from holding Workforce Holdings or generate 0.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.0%
Values	Daily Returns

Thungela Resources Limited  vs.  Workforce Holdings

Thungela Resources

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Thungela Resources Limited are ranked lower than 14 (%) 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.

Workforce Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Workforce Holdings 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 January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Thungela Resources and Workforce Holdings

The main advantage of trading using opposite Thungela Resources and Workforce Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thungela Resources position performs unexpectedly, Workforce Holdings 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 Workforce Holdings will offset losses from the drop in Workforce Holdings' long position.

The idea behind Thungela Resources Limited and Workforce Holdings 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.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.