Correlation Between Kumba Iron and E Media
Can any of the company-specific risk be diversified away by investing in both Kumba Iron and E Media 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 E Media 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 E Media Holdings, you can compare the effects of market volatilities on Kumba Iron and E Media 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 E Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kumba Iron and E Media.
Diversification Opportunities for Kumba Iron and E Media
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Kumba and EMH is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Kumba Iron Ore and E Media Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E Media 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 E Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E Media Holdings has no effect on the direction of Kumba Iron i.e., Kumba Iron and E Media go up and down completely randomly.
Pair Corralation between Kumba Iron and E Media
Assuming the 90 days trading horizon Kumba Iron Ore is expected to generate 1.53 times more return on investment than E Media. However, Kumba Iron is 1.53 times more volatile than E Media Holdings. It trades about -0.1 of its potential returns per unit of risk. E Media Holdings is currently generating about -0.3 per unit of risk. If you would invest 3,339,700 in Kumba Iron Ore on January 17, 2025 and sell it today you would lose (248,400) from holding Kumba Iron Ore or give up 7.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kumba Iron Ore vs. E Media Holdings
Performance |
| Timeline |
| Kumba Iron Ore |
| E Media Holdings |
Kumba Iron and E Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kumba Iron and E Media
The main advantage of trading using opposite Kumba Iron and E Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kumba Iron position performs unexpectedly, E Media 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 E Media will offset losses from the drop in E Media's long position.| Kumba Iron vs. Brimstone Investment | Kumba Iron vs. Astoria Investments | Kumba Iron vs. Ascendis Health | Kumba Iron vs. Frontier Transport Holdings |
| E Media vs. RCL Foods | E Media vs. Lesaka Technologies | E Media vs. Reinet Investments SCA | E Media vs. Ascendis Health |
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 CEOs Directory module to screen CEOs from public companies around the world.
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