Correlation Between Kumba Iron and Renergen
Can any of the company-specific risk be diversified away by investing in both Kumba Iron and Renergen 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 Renergen 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 Renergen, you can compare the effects of market volatilities on Kumba Iron and Renergen 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 Renergen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kumba Iron and Renergen.
Diversification Opportunities for Kumba Iron and Renergen
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Kumba and Renergen is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Kumba Iron Ore and Renergen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renergen 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 Renergen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renergen has no effect on the direction of Kumba Iron i.e., Kumba Iron and Renergen go up and down completely randomly.
Pair Corralation between Kumba Iron and Renergen
Assuming the 90 days trading horizon Kumba Iron Ore is expected to generate 0.99 times more return on investment than Renergen. However, Kumba Iron Ore is 1.01 times less risky than Renergen. It trades about -0.08 of its potential returns per unit of risk. Renergen is currently generating about -0.47 per unit of risk. If you would invest 3,886,300 in Kumba Iron Ore on December 2, 2024 and sell it today you would lose (186,300) from holding Kumba Iron Ore or give up 4.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kumba Iron Ore vs. Renergen
Performance |
| Timeline |
| Kumba Iron Ore |
| Renergen |
Kumba Iron and Renergen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kumba Iron and Renergen
The main advantage of trading using opposite Kumba Iron and Renergen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kumba Iron position performs unexpectedly, Renergen 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 Renergen will offset losses from the drop in Renergen's long position.| Kumba Iron vs. Advtech | Kumba Iron vs. Afine Investments | Kumba Iron vs. Brimstone Investment | Kumba Iron vs. Copper 360 |
| Renergen vs. Nedbank Group | Renergen vs. Harmony Gold Mining | Renergen vs. Ascendis Health | Renergen vs. Kumba Iron Ore |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |