Correlation Between Caledonia Mining and Ironveld Plc
Can any of the company-specific risk be diversified away by investing in both Caledonia Mining and Ironveld Plc 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 Caledonia Mining and Ironveld Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caledonia Mining and Ironveld Plc, you can compare the effects of market volatilities on Caledonia Mining and Ironveld Plc 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 Caledonia Mining with a short position of Ironveld Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caledonia Mining and Ironveld Plc.
Diversification Opportunities for Caledonia Mining and Ironveld Plc
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Caledonia and Ironveld is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Caledonia Mining and Ironveld Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ironveld Plc and Caledonia Mining 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 Caledonia Mining are associated (or correlated) with Ironveld Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ironveld Plc has no effect on the direction of Caledonia Mining i.e., Caledonia Mining and Ironveld Plc go up and down completely randomly.
Pair Corralation between Caledonia Mining and Ironveld Plc
Assuming the 90 days trading horizon Caledonia Mining is expected to generate 0.68 times more return on investment than Ironveld Plc. However, Caledonia Mining is 1.47 times less risky than Ironveld Plc. It trades about 0.03 of its potential returns per unit of risk. Ironveld Plc is currently generating about 0.02 per unit of risk. If you would invest 73,964 in Caledonia Mining on September 24, 2024 and sell it today you would earn a total of 4,036 from holding Caledonia Mining or generate 5.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caledonia Mining vs. Ironveld Plc
Performance |
| Timeline |
| Caledonia Mining |
| Ironveld Plc |
Caledonia Mining and Ironveld Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caledonia Mining and Ironveld Plc
The main advantage of trading using opposite Caledonia Mining and Ironveld Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caledonia Mining position performs unexpectedly, Ironveld Plc 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 Ironveld Plc will offset losses from the drop in Ironveld Plc's long position.| Caledonia Mining vs. Givaudan SA | Caledonia Mining vs. Antofagasta PLC | Caledonia Mining vs. Ferrexpo PLC | Caledonia Mining vs. Atalaya Mining |
| Ironveld Plc vs. Addtech | Ironveld Plc vs. Caledonia Mining | Ironveld Plc vs. Celebrus Technologies plc | Ironveld Plc vs. Atalaya Mining |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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