Correlation Between Kumba Iron and Sebata Holdings
Can any of the company-specific risk be diversified away by investing in both Kumba Iron and Sebata Holdings 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 Sebata Holdings 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 Sebata Holdings, you can compare the effects of market volatilities on Kumba Iron and Sebata Holdings 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 Sebata Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kumba Iron and Sebata Holdings.
Diversification Opportunities for Kumba Iron and Sebata Holdings
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Kumba and Sebata is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Kumba Iron Ore and Sebata Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sebata Holdings 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 Sebata Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sebata Holdings has no effect on the direction of Kumba Iron i.e., Kumba Iron and Sebata Holdings go up and down completely randomly.
Pair Corralation between Kumba Iron and Sebata Holdings
Assuming the 90 days trading horizon Kumba Iron Ore is expected to generate 0.72 times more return on investment than Sebata Holdings. However, Kumba Iron Ore is 1.4 times less risky than Sebata Holdings. It trades about 0.3 of its potential returns per unit of risk. Sebata Holdings is currently generating about 0.04 per unit of risk. If you would invest 3,320,600 in Kumba Iron Ore on November 3, 2024 and sell it today you would earn a total of 565,700 from holding Kumba Iron Ore or generate 17.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kumba Iron Ore vs. Sebata Holdings
Performance |
| Timeline |
| Kumba Iron Ore |
| Sebata Holdings |
Kumba Iron and Sebata Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kumba Iron and Sebata Holdings
The main advantage of trading using opposite Kumba Iron and Sebata Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kumba Iron position performs unexpectedly, Sebata Holdings 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 Sebata Holdings will offset losses from the drop in Sebata Holdings' long position.| Kumba Iron vs. Reinet Investments SCA | Kumba Iron vs. Trematon Capital Investments | Kumba Iron vs. RCL Foods | Kumba Iron vs. Nedbank Group |
| Sebata Holdings vs. Trematon Capital Investments | Sebata Holdings vs. Brimstone Investment | Sebata Holdings vs. RCL Foods | Sebata Holdings vs. Zeder 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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