Correlation Between E Media and Kumba Iron
Can any of the company-specific risk be diversified away by investing in both E Media 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 E Media and Kumba Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between E Media Holdings and Kumba Iron Ore, you can compare the effects of market volatilities on E Media 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 E Media with a short position of Kumba Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of E Media and Kumba Iron.
Diversification Opportunities for E Media and Kumba Iron
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between EMH and Kumba is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding E Media Holdings 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 E Media 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 E Media Holdings 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 E Media i.e., E Media and Kumba Iron go up and down completely randomly.
Pair Corralation between E Media and Kumba Iron
Assuming the 90 days trading horizon E Media Holdings is expected to generate 0.79 times more return on investment than Kumba Iron. However, E Media Holdings is 1.27 times less risky than Kumba Iron. It trades about 0.07 of its potential returns per unit of risk. Kumba Iron Ore is currently generating about 0.03 per unit of risk. If you would invest 34,200 in E Media Holdings on September 15, 2024 and sell it today you would earn a total of 800.00 from holding E Media Holdings or generate 2.34% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
E Media Holdings vs. Kumba Iron Ore
Performance |
Timeline |
E Media Holdings |
Kumba Iron Ore |
E Media and Kumba Iron Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with E Media and Kumba Iron
The main advantage of trading using opposite E Media and Kumba Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E Media 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.E Media vs. eMedia Holdings Limited | E Media vs. Sasol Ltd Bee | E Media vs. Centaur Bci Balanced | E Media vs. Sabvest Capital |
Kumba Iron vs. ArcelorMittal South Africa | Kumba Iron vs. Argent | Kumba Iron vs. Sasol Ltd Bee | Kumba Iron vs. Centaur Bci Balanced |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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