Correlation Between Kumba Iron and Bowler Metcalf
Can any of the company-specific risk be diversified away by investing in both Kumba Iron and Bowler Metcalf 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 Kumba Iron and Bowler Metcalf into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kumba Iron Ore and Bowler Metcalf, you can compare the effects of market volatilities on Kumba Iron and Bowler Metcalf 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 Kumba Iron with a short position of Bowler Metcalf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kumba Iron and Bowler Metcalf.
Diversification Opportunities for Kumba Iron and Bowler Metcalf
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kumba and Bowler is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Kumba Iron Ore and Bowler Metcalf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bowler Metcalf and Kumba Iron 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 Kumba Iron Ore are associated (or correlated) with Bowler Metcalf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bowler Metcalf has no effect on the direction of Kumba Iron i.e., Kumba Iron and Bowler Metcalf go up and down completely randomly.
Pair Corralation between Kumba Iron and Bowler Metcalf
Assuming the 90 days trading horizon Kumba Iron Ore is expected to under-perform the Bowler Metcalf. But the stock apears to be less risky and, when comparing its historical volatility, Kumba Iron Ore is 1.87 times less risky than Bowler Metcalf. The stock trades about -0.02 of its potential returns per unit of risk. The Bowler Metcalf is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 89,003 in Bowler Metcalf on August 28, 2024 and sell it today you would earn a total of 46,897 from holding Bowler Metcalf or generate 52.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kumba Iron Ore vs. Bowler Metcalf
Performance |
| Timeline |
| Kumba Iron Ore |
| Bowler Metcalf |
Kumba Iron and Bowler Metcalf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kumba Iron and Bowler Metcalf
The main advantage of trading using opposite Kumba Iron and Bowler Metcalf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kumba Iron position performs unexpectedly, Bowler Metcalf 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 Bowler Metcalf will offset losses from the drop in Bowler Metcalf's long position.| Kumba Iron vs. Ascendis Health | Kumba Iron vs. eMedia Holdings Limited | Kumba Iron vs. Hosken Consolidated Investments | Kumba Iron vs. Zeder Investments |
| Bowler Metcalf vs. Datatec | Bowler Metcalf vs. Deneb Investments | Bowler Metcalf vs. City Lodge Hotels | Bowler Metcalf vs. Zeder 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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