Correlation Between MC Mining and Kumba Iron
Can any of the company-specific risk be diversified away by investing in both MC Mining and Kumba Iron 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 MC Mining and Kumba Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MC Mining and Kumba Iron Ore, you can compare the effects of market volatilities on MC Mining and Kumba Iron 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 MC Mining with a short position of Kumba Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of MC Mining and Kumba Iron.
Diversification Opportunities for MC Mining and Kumba Iron
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MCZ and Kumba is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding MC Mining and Kumba Iron Ore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kumba Iron Ore and MC Mining 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 MC Mining are associated (or correlated) with Kumba Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kumba Iron Ore has no effect on the direction of MC Mining i.e., MC Mining and Kumba Iron go up and down completely randomly.
Pair Corralation between MC Mining and Kumba Iron
Assuming the 90 days trading horizon MC Mining is expected to under-perform the Kumba Iron. In addition to that, MC Mining is 2.58 times more volatile than Kumba Iron Ore. It trades about -0.53 of its total potential returns per unit of risk. Kumba Iron Ore is currently generating about 0.41 per unit of volatility. If you would invest 3,220,000 in Kumba Iron Ore on October 24, 2024 and sell it today you would earn a total of 415,000 from holding Kumba Iron Ore or generate 12.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MC Mining vs. Kumba Iron Ore
Performance |
| Timeline |
| MC Mining |
| Kumba Iron Ore |
MC Mining and Kumba Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MC Mining and Kumba Iron
The main advantage of trading using opposite MC Mining and Kumba Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MC Mining position performs unexpectedly, Kumba Iron 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 Kumba Iron will offset losses from the drop in Kumba Iron's long position.| MC Mining vs. RCL Foods | MC Mining vs. HomeChoice Investments | MC Mining vs. Deneb Investments | MC Mining vs. Brimstone Investment |
| Kumba Iron vs. Bytes Technology | Kumba Iron vs. ABSA Bank Limited | Kumba Iron vs. Frontier Transport Holdings | Kumba Iron vs. Hosken Consolidated 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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