Correlation Between Reunert and Kumba Iron
Can any of the company-specific risk be diversified away by investing in both Reunert 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 Reunert and Kumba Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reunert and Kumba Iron Ore, you can compare the effects of market volatilities on Reunert 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 Reunert with a short position of Kumba Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reunert and Kumba Iron.
Diversification Opportunities for Reunert and Kumba Iron
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Reunert and Kumba is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Reunert 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 Reunert 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 Reunert 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 Reunert i.e., Reunert and Kumba Iron go up and down completely randomly.
Pair Corralation between Reunert and Kumba Iron
Assuming the 90 days trading horizon Reunert is not expected to generate positive returns. However, Reunert is 1.93 times less risky than Kumba Iron. It waists most of its returns potential to compensate for thr risk taken. Kumba Iron is generating about 0.03 per unit of risk. If you would invest 3,244,700 in Kumba Iron Ore on September 3, 2024 and sell it today you would earn a total of 81,000 from holding Kumba Iron Ore or generate 2.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Reunert vs. Kumba Iron Ore
Performance |
| Timeline |
| Reunert |
| Kumba Iron Ore |
Reunert and Kumba Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reunert and Kumba Iron
The main advantage of trading using opposite Reunert and Kumba Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reunert 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.| Reunert vs. Kumba Iron Ore | Reunert vs. Harmony Gold Mining | Reunert vs. Bytes Technology | Reunert vs. Hosken Consolidated Investments |
| Kumba Iron vs. Trematon Capital Investments | Kumba Iron vs. Hosken Consolidated Investments | Kumba Iron vs. Reinet Investments SCA | Kumba Iron vs. Brimstone Investment |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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