Correlation Between Kumba Iron and Arrowhead Properties
Can any of the company-specific risk be diversified away by investing in both Kumba Iron and Arrowhead Properties 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 Arrowhead Properties 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 Arrowhead Properties Ltd, you can compare the effects of market volatilities on Kumba Iron and Arrowhead Properties 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 Arrowhead Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kumba Iron and Arrowhead Properties.
Diversification Opportunities for Kumba Iron and Arrowhead Properties
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kumba and Arrowhead is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Kumba Iron Ore and Arrowhead Properties Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrowhead Properties 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 Arrowhead Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrowhead Properties has no effect on the direction of Kumba Iron i.e., Kumba Iron and Arrowhead Properties go up and down completely randomly.
Pair Corralation between Kumba Iron and Arrowhead Properties
Assuming the 90 days trading horizon Kumba Iron Ore is expected to under-perform the Arrowhead Properties. In addition to that, Kumba Iron is 1.28 times more volatile than Arrowhead Properties Ltd. It trades about -0.06 of its total potential returns per unit of risk. Arrowhead Properties Ltd is currently generating about 0.2 per unit of volatility. If you would invest 46,600 in Arrowhead Properties Ltd on September 2, 2024 and sell it today you would earn a total of 3,000 from holding Arrowhead Properties Ltd or generate 6.44% 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. Arrowhead Properties Ltd
Performance |
| Timeline |
| Kumba Iron Ore |
| Arrowhead Properties |
Kumba Iron and Arrowhead Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kumba Iron and Arrowhead Properties
The main advantage of trading using opposite Kumba Iron and Arrowhead Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kumba Iron position performs unexpectedly, Arrowhead Properties 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 Arrowhead Properties will offset losses from the drop in Arrowhead Properties' long position.| Kumba Iron vs. Datatec | Kumba Iron vs. Kap Industrial Holdings | Kumba Iron vs. HomeChoice Investments | Kumba Iron vs. Lesaka Technologies |
| Arrowhead Properties vs. Frontier Transport Holdings | Arrowhead Properties vs. HomeChoice Investments | Arrowhead Properties vs. Kumba Iron Ore | Arrowhead Properties 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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