Correlation Between Kap Industrial and Impala Platinum
Can any of the company-specific risk be diversified away by investing in both Kap Industrial and Impala Platinum 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 Kap Industrial and Impala Platinum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kap Industrial Holdings and Impala Platinum Holdings, you can compare the effects of market volatilities on Kap Industrial and Impala Platinum 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 Kap Industrial with a short position of Impala Platinum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kap Industrial and Impala Platinum.
Diversification Opportunities for Kap Industrial and Impala Platinum
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Kap and Impala is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Kap Industrial Holdings and Impala Platinum Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impala Platinum Holdings and Kap Industrial 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 Kap Industrial Holdings are associated (or correlated) with Impala Platinum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impala Platinum Holdings has no effect on the direction of Kap Industrial i.e., Kap Industrial and Impala Platinum go up and down completely randomly.
Pair Corralation between Kap Industrial and Impala Platinum
Assuming the 90 days trading horizon Kap Industrial Holdings is expected to generate 0.53 times more return on investment than Impala Platinum. However, Kap Industrial Holdings is 1.87 times less risky than Impala Platinum. It trades about -0.22 of its potential returns per unit of risk. Impala Platinum Holdings is currently generating about -0.27 per unit of risk. 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kap Industrial Holdings vs. Impala Platinum Holdings
Performance |
| Timeline |
| Kap Industrial Holdings |
| Impala Platinum Holdings |
Kap Industrial and Impala Platinum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kap Industrial and Impala Platinum
The main advantage of trading using opposite Kap Industrial and Impala Platinum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kap Industrial position performs unexpectedly, Impala Platinum 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 Impala Platinum will offset losses from the drop in Impala Platinum's long position.| 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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