Correlation Between Kumba Iron and Trencor
Can any of the company-specific risk be diversified away by investing in both Kumba Iron and Trencor 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 Trencor 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 Trencor, you can compare the effects of market volatilities on Kumba Iron and Trencor 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 Trencor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kumba Iron and Trencor.
Diversification Opportunities for Kumba Iron and Trencor
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kumba and Trencor is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Kumba Iron Ore and Trencor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trencor 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 Trencor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trencor has no effect on the direction of Kumba Iron i.e., Kumba Iron and Trencor go up and down completely randomly.
Pair Corralation between Kumba Iron and Trencor
Assuming the 90 days trading horizon Kumba Iron Ore is expected to generate 1.56 times more return on investment than Trencor. However, Kumba Iron is 1.56 times more volatile than Trencor. It trades about 0.06 of its potential returns per unit of risk. Trencor is currently generating about 0.1 per unit of risk. If you would invest 3,385,500 in Kumba Iron Ore on September 12, 2024 and sell it today you would earn a total of 79,800 from holding Kumba Iron Ore or generate 2.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kumba Iron Ore vs. Trencor
Performance |
| Timeline |
| Kumba Iron Ore |
| Trencor |
Kumba Iron and Trencor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kumba Iron and Trencor
The main advantage of trading using opposite Kumba Iron and Trencor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kumba Iron position performs unexpectedly, Trencor 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 Trencor will offset losses from the drop in Trencor's long position.| Kumba Iron vs. Master Drilling Group | Kumba Iron vs. Datatec | Kumba Iron vs. Frontier Transport Holdings | Kumba Iron vs. RCL Foods |
| Trencor vs. Sasol Ltd Bee | Trencor vs. Centaur Bci Balanced | Trencor vs. Sabvest Capital | Trencor vs. Growthpoint Properties |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Commodity Directory Find actively traded commodities issued by global exchanges |