Correlation Between Kumba Iron and African Media
Can any of the company-specific risk be diversified away by investing in both Kumba Iron and African Media 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 African Media 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 African Media Entertainment, you can compare the effects of market volatilities on Kumba Iron and African Media 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 African Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kumba Iron and African Media.
Diversification Opportunities for Kumba Iron and African Media
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Kumba and African is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Kumba Iron Ore and African Media Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on African Media Entert 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 African Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of African Media Entert has no effect on the direction of Kumba Iron i.e., Kumba Iron and African Media go up and down completely randomly.
Pair Corralation between Kumba Iron and African Media
Assuming the 90 days trading horizon Kumba Iron Ore is expected to generate 0.99 times more return on investment than African Media. However, Kumba Iron Ore is 1.01 times less risky than African Media. It trades about 0.06 of its potential returns per unit of risk. African Media Entertainment is currently generating about 0.0 per unit of risk. If you would invest 3,457,700 in Kumba Iron Ore on December 2, 2024 and sell it today you would earn a total of 242,300 from holding Kumba Iron Ore or generate 7.01% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 98.39% |
Values | Daily Returns |
Kumba Iron Ore vs. African Media Entertainment
Performance |
Timeline |
Kumba Iron Ore |
African Media Entert |
Kumba Iron and African Media Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Kumba Iron and African Media
The main advantage of trading using opposite Kumba Iron and African Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kumba Iron position performs unexpectedly, African Media 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 African Media will offset losses from the drop in African Media's long position.Kumba Iron vs. Advtech | Kumba Iron vs. Afine Investments | Kumba Iron vs. Brimstone Investment | Kumba Iron vs. Copper 360 |
African Media vs. Frontier Transport Holdings | African Media vs. E Media Holdings | African Media vs. Lesaka Technologies | African Media vs. Astral Foods |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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