Correlation Between Kumba Iron and Hosken Consolidated
Can any of the company-specific risk be diversified away by investing in both Kumba Iron and Hosken Consolidated 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 Hosken Consolidated 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 Hosken Consolidated Investments, you can compare the effects of market volatilities on Kumba Iron and Hosken Consolidated 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 Hosken Consolidated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kumba Iron and Hosken Consolidated.
Diversification Opportunities for Kumba Iron and Hosken Consolidated
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kumba and Hosken is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Kumba Iron Ore and Hosken Consolidated Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hosken Consolidated 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 Hosken Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hosken Consolidated has no effect on the direction of Kumba Iron i.e., Kumba Iron and Hosken Consolidated go up and down completely randomly.
Pair Corralation between Kumba Iron and Hosken Consolidated
Assuming the 90 days trading horizon Kumba Iron Ore is expected to under-perform the Hosken Consolidated. In addition to that, Kumba Iron is 1.83 times more volatile than Hosken Consolidated Investments. It trades about -0.08 of its total potential returns per unit of risk. Hosken Consolidated Investments is currently generating about 0.04 per unit of volatility. If you would invest 1,771,400 in Hosken Consolidated Investments on August 28, 2024 and sell it today you would earn a total of 184,500 from holding Hosken Consolidated Investments or generate 10.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kumba Iron Ore vs. Hosken Consolidated Investment
Performance |
| Timeline |
| Kumba Iron Ore |
| Hosken Consolidated |
Kumba Iron and Hosken Consolidated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kumba Iron and Hosken Consolidated
The main advantage of trading using opposite Kumba Iron and Hosken Consolidated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kumba Iron position performs unexpectedly, Hosken Consolidated 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 Hosken Consolidated will offset losses from the drop in Hosken Consolidated'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 |
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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