Correlation Between Primary Health and Thungela Resources

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

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

Diversification Opportunities for Primary Health and Thungela Resources

0.05

Correlation Coefficient

Primary Health  Thungela Resources

Significant diversification

The 3 months correlation between Primary and Thungela is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Primary Health Properties and Thungela Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thungela Resources and Primary Health 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 Primary Health Properties 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 Primary Health i.e., Primary Health and Thungela Resources go up and down completely randomly.

Pair Corralation between Primary Health and Thungela Resources

Assuming the 90 days trading horizon Primary Health Properties is expected to generate 0.38 times more return on investment than Thungela Resources. However, Primary Health Properties is 2.62 times less risky than Thungela Resources. It trades about -0.04 of its potential returns per unit of risk. Thungela Resources Limited is currently generating about -0.02 per unit of risk. If you would invest  9,993  in Primary Health Properties on April 23, 2025 and sell it today you would lose (328.00) from holding Primary Health Properties or give up 3.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Primary Health Properties  vs.  Thungela Resources Limited

Primary Health Properties

Risk-Adjusted Performance

Very Weak

Over the last 90 days Primary Health Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Primary Health is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Thungela Resources

Risk-Adjusted Performance

OK

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 rather sound technical and fundamental indicators, Thungela Resources is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Primary Health and Thungela Resources

The main advantage of trading using opposite Primary Health and Thungela Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Primary Health 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 Primary Health Properties 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.