Correlation Between Afrimat and Kumba Iron
Can any of the company-specific risk be diversified away by investing in both Afrimat and Kumba Iron 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 Afrimat and Kumba Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Afrimat and Kumba Iron Ore, you can compare the effects of market volatilities on Afrimat and Kumba Iron 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 Afrimat with a short position of Kumba Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Afrimat and Kumba Iron.
Diversification Opportunities for Afrimat and Kumba Iron
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Afrimat and Kumba is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Afrimat and Kumba Iron Ore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kumba Iron Ore and Afrimat 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 Afrimat are associated (or correlated) with Kumba Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kumba Iron Ore has no effect on the direction of Afrimat i.e., Afrimat and Kumba Iron go up and down completely randomly.
Pair Corralation between Afrimat and Kumba Iron
Assuming the 90 days trading horizon Afrimat is expected to generate 0.71 times more return on investment than Kumba Iron. However, Afrimat is 1.41 times less risky than Kumba Iron. It trades about 0.29 of its potential returns per unit of risk. Kumba Iron Ore is currently generating about 0.05 per unit of risk. If you would invest 645,700 in Afrimat on September 13, 2024 and sell it today you would earn a total of 60,200 from holding Afrimat or generate 9.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Afrimat vs. Kumba Iron Ore
Performance |
| Timeline |
| Afrimat |
| Kumba Iron Ore |
Afrimat and Kumba Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Afrimat and Kumba Iron
The main advantage of trading using opposite Afrimat and Kumba Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Afrimat position performs unexpectedly, Kumba Iron 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 Kumba Iron will offset losses from the drop in Kumba Iron's long position.| Afrimat vs. Kumba Iron Ore | Afrimat vs. Safari Investments RSA | Afrimat vs. AfroCentric Investment Corp | Afrimat vs. MC Mining |
| Kumba Iron vs. Astoria Investments | Kumba Iron vs. Zeder Investments | Kumba Iron vs. Capitec Bank Holdings | Kumba Iron vs. HomeChoice Investments |
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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