Correlation Between Jubilee Platinum and African Rainbow
Can any of the company-specific risk be diversified away by investing in both Jubilee Platinum and African Rainbow 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 Jubilee Platinum and African Rainbow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jubilee Platinum and African Rainbow Minerals, you can compare the effects of market volatilities on Jubilee Platinum and African Rainbow 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 Jubilee Platinum with a short position of African Rainbow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jubilee Platinum and African Rainbow.
Diversification Opportunities for Jubilee Platinum and African Rainbow
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Jubilee and African is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Jubilee Platinum and African Rainbow Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on African Rainbow Minerals and Jubilee Platinum 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 Jubilee Platinum are associated (or correlated) with African Rainbow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of African Rainbow Minerals has no effect on the direction of Jubilee Platinum i.e., Jubilee Platinum and African Rainbow go up and down completely randomly.
Pair Corralation between Jubilee Platinum and African Rainbow
Assuming the 90 days trading horizon Jubilee Platinum is expected to under-perform the African Rainbow. In addition to that, Jubilee Platinum is 1.53 times more volatile than African Rainbow Minerals. It trades about -0.28 of its total potential returns per unit of risk. African Rainbow Minerals is currently generating about 0.01 per unit of volatility. If you would invest 1,620,000 in African Rainbow Minerals on September 14, 2024 and sell it today you would earn a total of 1,900 from holding African Rainbow Minerals or generate 0.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jubilee Platinum vs. African Rainbow Minerals
Performance |
| Timeline |
| Jubilee Platinum |
| African Rainbow Minerals |
Jubilee Platinum and African Rainbow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jubilee Platinum and African Rainbow
The main advantage of trading using opposite Jubilee Platinum and African Rainbow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jubilee Platinum position performs unexpectedly, African Rainbow 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 African Rainbow will offset losses from the drop in African Rainbow's long position.| Jubilee Platinum vs. African Rainbow Minerals | Jubilee Platinum vs. Europa Metals | Jubilee Platinum vs. Sasol Ltd Bee | Jubilee Platinum vs. Centaur Bci Balanced |
| African Rainbow vs. RCL Foods | African Rainbow vs. Harmony Gold Mining | African Rainbow vs. Datatec | African Rainbow vs. Brimstone Investment |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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