Correlation Between Kumba Iron and Zeder Investments
Can any of the company-specific risk be diversified away by investing in both Kumba Iron and Zeder Investments 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 Zeder Investments 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 Zeder Investments, you can compare the effects of market volatilities on Kumba Iron and Zeder Investments 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 Zeder Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kumba Iron and Zeder Investments.
Diversification Opportunities for Kumba Iron and Zeder Investments
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Kumba and Zeder is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Kumba Iron Ore and Zeder Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zeder Investments 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 Zeder Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zeder Investments has no effect on the direction of Kumba Iron i.e., Kumba Iron and Zeder Investments go up and down completely randomly.
Pair Corralation between Kumba Iron and Zeder Investments
Assuming the 90 days trading horizon Kumba Iron Ore is expected to under-perform the Zeder Investments. In addition to that, Kumba Iron is 1.01 times more volatile than Zeder Investments. It trades about -0.01 of its total potential returns per unit of risk. Zeder Investments is currently generating about 0.01 per unit of volatility. If you would invest 17,000 in Zeder Investments on November 2, 2024 and sell it today you would lose (1,000.00) from holding Zeder Investments or give up 5.88% 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. Zeder Investments
Performance |
| Timeline |
| Kumba Iron Ore |
| Zeder Investments |
Kumba Iron and Zeder Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kumba Iron and Zeder Investments
The main advantage of trading using opposite Kumba Iron and Zeder Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kumba Iron position performs unexpectedly, Zeder Investments 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 Zeder Investments will offset losses from the drop in Zeder Investments' long position.| Kumba Iron vs. Safari Investments RSA | Kumba Iron vs. Boxer Retail | Kumba Iron vs. Kap Industrial Holdings | Kumba Iron vs. HomeChoice Investments |
| Zeder Investments vs. Deneb Investments | Zeder Investments vs. British American Tobacco | Zeder Investments vs. Boxer Retail | Zeder Investments vs. Reinet Investments SCA |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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