Correlation Between Kumba Iron and CA Sales
Can any of the company-specific risk be diversified away by investing in both Kumba Iron and CA Sales 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 CA Sales 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 CA Sales Holdings, you can compare the effects of market volatilities on Kumba Iron and CA Sales 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 CA Sales. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kumba Iron and CA Sales.
Diversification Opportunities for Kumba Iron and CA Sales
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kumba and CAA is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Kumba Iron Ore and CA Sales Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CA Sales Holdings 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 CA Sales. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CA Sales Holdings has no effect on the direction of Kumba Iron i.e., Kumba Iron and CA Sales go up and down completely randomly.
Pair Corralation between Kumba Iron and CA Sales
Assuming the 90 days trading horizon Kumba Iron Ore is expected to generate 0.84 times more return on investment than CA Sales. However, Kumba Iron Ore is 1.19 times less risky than CA Sales. It trades about 0.33 of its potential returns per unit of risk. CA Sales Holdings is currently generating about -0.05 per unit of risk. If you would invest 3,282,000 in Kumba Iron Ore on November 4, 2024 and sell it today you would earn a total of 604,300 from holding Kumba Iron Ore or generate 18.41% 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. CA Sales Holdings
Performance |
| Timeline |
| Kumba Iron Ore |
| CA Sales Holdings |
Kumba Iron and CA Sales Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kumba Iron and CA Sales
The main advantage of trading using opposite Kumba Iron and CA Sales positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kumba Iron position performs unexpectedly, CA Sales 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 CA Sales will offset losses from the drop in CA Sales' long position.| Kumba Iron vs. Reinet Investments SCA | Kumba Iron vs. Trematon Capital Investments | Kumba Iron vs. RCL Foods | Kumba Iron vs. Nedbank Group |
| CA Sales vs. City Lodge Hotels | CA Sales vs. Bytes Technology | CA Sales vs. Zeder Investments | CA Sales vs. We Buy Cars |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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