Correlation Between Anglo American and Kap Industrial
Can any of the company-specific risk be diversified away by investing in both Anglo American and Kap Industrial 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 Anglo American and Kap Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Anglo American Platinum and Kap Industrial Holdings, you can compare the effects of market volatilities on Anglo American and Kap Industrial 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 Anglo American with a short position of Kap Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anglo American and Kap Industrial.
Diversification Opportunities for Anglo American and Kap Industrial
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Anglo and Kap is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Anglo American Platinum and Kap Industrial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kap Industrial Holdings and Anglo American 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 Anglo American Platinum are associated (or correlated) with Kap Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kap Industrial Holdings has no effect on the direction of Anglo American i.e., Anglo American and Kap Industrial go up and down completely randomly.
Pair Corralation between Anglo American and Kap Industrial
Assuming the 90 days trading horizon Anglo American Platinum is expected to under-perform the Kap Industrial. In addition to that, Anglo American is 1.57 times more volatile than Kap Industrial Holdings. It trades about -0.4 of its total potential returns per unit of risk. Kap Industrial Holdings is currently generating about -0.22 per unit of volatility. If you would invest 34,200 in Kap Industrial Holdings on August 28, 2024 and sell it today you would lose (3,000) from holding Kap Industrial Holdings or give up 8.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Anglo American Platinum vs. Kap Industrial Holdings
Performance |
| Timeline |
| Anglo American Platinum |
| Kap Industrial Holdings |
Anglo American and Kap Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anglo American and Kap Industrial
The main advantage of trading using opposite Anglo American and Kap Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anglo American position performs unexpectedly, Kap Industrial 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 Kap Industrial will offset losses from the drop in Kap Industrial's long position.| Anglo American vs. CA Sales Holdings | Anglo American vs. Life Healthcare | Anglo American vs. Afine Investments | Anglo American vs. E Media Holdings |
| Kap Industrial vs. ABSA Bank Limited | Kap Industrial vs. Astral Foods | Kap Industrial vs. Hosken Consolidated Investments | Kap Industrial vs. Trematon Capital 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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