Correlation Between Frontier Transport and Kumba Iron
Can any of the company-specific risk be diversified away by investing in both Frontier Transport 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 Frontier Transport and Kumba Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Frontier Transport Holdings and Kumba Iron Ore, you can compare the effects of market volatilities on Frontier Transport 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 Frontier Transport with a short position of Kumba Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frontier Transport and Kumba Iron.
Diversification Opportunities for Frontier Transport and Kumba Iron
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Frontier and Kumba is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Frontier Transport Holdings 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 Frontier Transport 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 Frontier Transport Holdings 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 Frontier Transport i.e., Frontier Transport and Kumba Iron go up and down completely randomly.
Pair Corralation between Frontier Transport and Kumba Iron
Assuming the 90 days trading horizon Frontier Transport is expected to generate 44.04 times less return on investment than Kumba Iron. But when comparing it to its historical volatility, Frontier Transport Holdings is 1.3 times less risky than Kumba Iron. It trades about 0.01 of its potential returns per unit of risk. Kumba Iron Ore is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 3,320,600 in Kumba Iron Ore on November 3, 2024 and sell it today you would earn a total of 565,700 from holding Kumba Iron Ore or generate 17.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Frontier Transport Holdings vs. Kumba Iron Ore
Performance |
| Timeline |
| Frontier Transport |
| Kumba Iron Ore |
Frontier Transport and Kumba Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Frontier Transport and Kumba Iron
The main advantage of trading using opposite Frontier Transport and Kumba Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frontier Transport 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.| Frontier Transport vs. Lesaka Technologies | Frontier Transport vs. Blue Label Telecoms | Frontier Transport vs. Bytes Technology | Frontier Transport vs. Datatec |
| Kumba Iron vs. Reinet Investments SCA | Kumba Iron vs. Trematon Capital Investments | Kumba Iron vs. RCL Foods | Kumba Iron vs. Nedbank Group |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |