Correlation Between Zeder Investments and Kumba Iron
Can any of the company-specific risk be diversified away by investing in both Zeder Investments 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 Zeder Investments and Kumba Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zeder Investments and Kumba Iron Ore, you can compare the effects of market volatilities on Zeder Investments 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 Zeder Investments with a short position of Kumba Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zeder Investments and Kumba Iron.
Diversification Opportunities for Zeder Investments and Kumba Iron
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Zeder and Kumba is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Zeder Investments 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 Zeder Investments 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 Zeder Investments 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 Zeder Investments i.e., Zeder Investments and Kumba Iron go up and down completely randomly.
Pair Corralation between Zeder Investments and Kumba Iron
Assuming the 90 days trading horizon Zeder Investments is expected to under-perform the Kumba Iron. In addition to that, Zeder Investments is 1.11 times more volatile than Kumba Iron Ore. It trades about -0.15 of its total potential returns per unit of risk. Kumba Iron Ore is currently generating about -0.14 per unit of volatility. If you would invest 3,898,200 in Kumba Iron Ore on August 28, 2024 and sell it today you would lose (552,900) from holding Kumba Iron Ore or give up 14.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zeder Investments vs. Kumba Iron Ore
Performance |
| Timeline |
| Zeder Investments |
| Kumba Iron Ore |
Zeder Investments and Kumba Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zeder Investments and Kumba Iron
The main advantage of trading using opposite Zeder Investments and Kumba Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zeder Investments 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.| Zeder Investments vs. Harmony Gold Mining | Zeder Investments vs. Lesaka Technologies | Zeder Investments vs. We Buy Cars | Zeder Investments vs. Frontier Transport Holdings |
| Kumba Iron vs. CA Sales Holdings | Kumba Iron vs. Hosken Consolidated Investments | Kumba Iron vs. Zeder Investments | Kumba Iron vs. Afine 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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