Correlation Between Acerinox and Kumba Iron
Can any of the company-specific risk be diversified away by investing in both Acerinox 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 Acerinox and Kumba Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acerinox SA ADR and Kumba Iron Ore, you can compare the effects of market volatilities on Acerinox 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 Acerinox with a short position of Kumba Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acerinox and Kumba Iron.
Diversification Opportunities for Acerinox and Kumba Iron
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Acerinox and Kumba is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Acerinox SA ADR 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 Acerinox 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 Acerinox SA ADR 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 Acerinox i.e., Acerinox and Kumba Iron go up and down completely randomly.
Pair Corralation between Acerinox and Kumba Iron
Assuming the 90 days horizon Acerinox SA ADR is expected to under-perform the Kumba Iron. But the pink sheet apears to be less risky and, when comparing its historical volatility, Acerinox SA ADR is 1.06 times less risky than Kumba Iron. The pink sheet trades about -0.1 of its potential returns per unit of risk. The Kumba Iron Ore is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 645.00 in Kumba Iron Ore on August 24, 2024 and sell it today you would lose (8.00) from holding Kumba Iron Ore or give up 1.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Acerinox SA ADR vs. Kumba Iron Ore
Performance |
| Timeline |
| Acerinox SA ADR |
| Kumba Iron Ore |
Acerinox and Kumba Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Acerinox and Kumba Iron
The main advantage of trading using opposite Acerinox and Kumba Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acerinox 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.| Acerinox vs. Algoma Steel Group | Acerinox vs. Synalloy | Acerinox vs. Algoma Steel Group | Acerinox vs. Aperam PK |
| Kumba Iron vs. Olympic Steel | Kumba Iron vs. Mesabi Trust | Kumba Iron vs. Universal Stainless Alloy | Kumba Iron vs. POSCO Holdings |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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