Correlation Between Thungela Resources and Alliance Resource
Can any of the company-specific risk be diversified away by investing in both Thungela Resources and Alliance Resource 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 Alliance Resource 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 Alliance Resource Partners, you can compare the effects of market volatilities on Thungela Resources and Alliance Resource 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 Alliance Resource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thungela Resources and Alliance Resource.
Diversification Opportunities for Thungela Resources and Alliance Resource
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Thungela and Alliance is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Thungela Resources Limited and Alliance Resource Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Resource 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 Alliance Resource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Resource has no effect on the direction of Thungela Resources i.e., Thungela Resources and Alliance Resource go up and down completely randomly.
Pair Corralation between Thungela Resources and Alliance Resource
Assuming the 90 days horizon Thungela Resources Limited is expected to generate 2.78 times more return on investment than Alliance Resource. However, Thungela Resources is 2.78 times more volatile than Alliance Resource Partners. It trades about 0.07 of its potential returns per unit of risk. Alliance Resource Partners is currently generating about 0.1 per unit of risk. If you would invest 659.00 in Thungela Resources Limited on July 29, 2024 and sell it today you would earn a total of 76.00 from holding Thungela Resources Limited or generate 11.53% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 89.23% |
Values | Daily Returns |
Thungela Resources Limited vs. Alliance Resource Partners
Performance |
Timeline |
Thungela Resources |
Alliance Resource |
Thungela Resources and Alliance Resource Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Thungela Resources and Alliance Resource
The main advantage of trading using opposite Thungela Resources and Alliance Resource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thungela Resources position performs unexpectedly, Alliance Resource 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 Alliance Resource will offset losses from the drop in Alliance Resource's long position.Thungela Resources vs. Alliance Resource Partners | Thungela Resources vs. SBM Offshore NV | Thungela Resources vs. Everi Holdings | Thungela Resources vs. Eagle Point Credit |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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