Correlation Between Kumba Iron and Orion Gold
Can any of the company-specific risk be diversified away by investing in both Kumba Iron and Orion Gold 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 Orion Gold 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 Orion Gold NL, you can compare the effects of market volatilities on Kumba Iron and Orion Gold 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 Orion Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kumba Iron and Orion Gold.
Diversification Opportunities for Kumba Iron and Orion Gold
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kumba and Orion is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Kumba Iron Ore and Orion Gold NL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orion Gold NL 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 Orion Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orion Gold NL has no effect on the direction of Kumba Iron i.e., Kumba Iron and Orion Gold go up and down completely randomly.
Pair Corralation between Kumba Iron and Orion Gold
Assuming the 90 days trading horizon Kumba Iron Ore is expected to under-perform the Orion Gold. But the stock apears to be less risky and, when comparing its historical volatility, Kumba Iron Ore is 1.7 times less risky than Orion Gold. The stock trades about -0.01 of its potential returns per unit of risk. The Orion Gold NL is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,900 in Orion Gold NL on September 3, 2024 and sell it today you would lose (100.00) from holding Orion Gold NL or give up 5.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kumba Iron Ore vs. Orion Gold NL
Performance |
| Timeline |
| Kumba Iron Ore |
| Orion Gold NL |
Kumba Iron and Orion Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kumba Iron and Orion Gold
The main advantage of trading using opposite Kumba Iron and Orion Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kumba Iron position performs unexpectedly, Orion Gold 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 Orion Gold will offset losses from the drop in Orion Gold's long position.| Kumba Iron vs. Trematon Capital Investments | Kumba Iron vs. Hosken Consolidated Investments | Kumba Iron vs. Reinet Investments SCA | Kumba Iron vs. Brimstone Investment |
| Orion Gold vs. Kumba Iron Ore | Orion Gold vs. Trematon Capital Investments | Orion Gold vs. Capitec Bank Holdings | Orion Gold vs. Deneb 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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