Correlation Between Kumba Iron and Master Drilling
Can any of the company-specific risk be diversified away by investing in both Kumba Iron and Master Drilling 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 Master Drilling 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 Master Drilling Group, you can compare the effects of market volatilities on Kumba Iron and Master Drilling 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 Master Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kumba Iron and Master Drilling.
Diversification Opportunities for Kumba Iron and Master Drilling
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Kumba and Master is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Kumba Iron Ore and Master Drilling Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Master Drilling Group 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 Master Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Master Drilling Group has no effect on the direction of Kumba Iron i.e., Kumba Iron and Master Drilling go up and down completely randomly.
Pair Corralation between Kumba Iron and Master Drilling
Assuming the 90 days trading horizon Kumba Iron Ore is expected to under-perform the Master Drilling. In addition to that, Kumba Iron is 1.08 times more volatile than Master Drilling Group. It trades about -0.01 of its total potential returns per unit of risk. Master Drilling Group is currently generating about 0.01 per unit of volatility. If you would invest 135,347 in Master Drilling Group on August 31, 2024 and sell it today you would lose (247.00) from holding Master Drilling Group or give up 0.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kumba Iron Ore vs. Master Drilling Group
Performance |
| Timeline |
| Kumba Iron Ore |
| Master Drilling Group |
Kumba Iron and Master Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kumba Iron and Master Drilling
The main advantage of trading using opposite Kumba Iron and Master Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kumba Iron position performs unexpectedly, Master Drilling 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 Master Drilling will offset losses from the drop in Master Drilling's long position.| Kumba Iron vs. Centaur Bci Balanced | Kumba Iron vs. Sabvest Capital | Kumba Iron vs. AfricaRhodium ETF | Kumba Iron vs. Indexco Limited |
| Master Drilling vs. Kumba Iron Ore | Master Drilling vs. Astral Foods | Master Drilling vs. Frontier Transport Holdings | Master Drilling vs. CA Sales Holdings |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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