Correlation Between Kumba Iron and Aperam PK
Can any of the company-specific risk be diversified away by investing in both Kumba Iron and Aperam PK 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 Aperam PK 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 Aperam PK, you can compare the effects of market volatilities on Kumba Iron and Aperam PK 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 Aperam PK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kumba Iron and Aperam PK.
Diversification Opportunities for Kumba Iron and Aperam PK
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kumba and Aperam is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Kumba Iron Ore and Aperam PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aperam PK 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 Aperam PK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aperam PK has no effect on the direction of Kumba Iron i.e., Kumba Iron and Aperam PK go up and down completely randomly.
Pair Corralation between Kumba Iron and Aperam PK
Assuming the 90 days horizon Kumba Iron Ore is expected to under-perform the Aperam PK. In addition to that, Kumba Iron is 1.06 times more volatile than Aperam PK. It trades about -0.1 of its total potential returns per unit of risk. Aperam PK is currently generating about 0.21 per unit of volatility. If you would invest 2,722 in Aperam PK on August 28, 2024 and sell it today you would earn a total of 244.00 from holding Aperam PK or generate 8.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Kumba Iron Ore vs. Aperam PK
Performance |
| Timeline |
| Kumba Iron Ore |
| Aperam PK |
Kumba Iron and Aperam PK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kumba Iron and Aperam PK
The main advantage of trading using opposite Kumba Iron and Aperam PK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kumba Iron position performs unexpectedly, Aperam PK 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 Aperam PK will offset losses from the drop in Aperam PK's long position.| Kumba Iron vs. Labrador Iron Ore | Kumba Iron vs. Fortescue Metals Group | Kumba Iron vs. Fortescue Metals Group | Kumba Iron vs. Anhui Conch Cement |
| Aperam PK vs. Olympic Steel | Aperam PK vs. Mesabi Trust | Aperam PK vs. Universal Stainless Alloy | Aperam PK vs. POSCO Holdings |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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