Correlation Between Kumba Iron and Mantengu Mining

Can any of the company-specific risk be diversified away by investing in both Kumba Iron and Mantengu Mining 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 Mantengu Mining 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 Mantengu Mining, you can compare the effects of market volatilities on Kumba Iron and Mantengu Mining 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 Mantengu Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kumba Iron and Mantengu Mining.

Diversification Opportunities for Kumba Iron and Mantengu Mining

-0.13

Correlation Coefficient

Kumba Iron  Mantengu Mining

Good diversification

The 3 months correlation between Kumba and Mantengu is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Kumba Iron Ore and Mantengu Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mantengu Mining 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 Mantengu Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mantengu Mining has no effect on the direction of Kumba Iron i.e., Kumba Iron and Mantengu Mining go up and down completely randomly.

Pair Corralation between Kumba Iron and Mantengu Mining

Assuming the 90 days trading horizon Kumba Iron Ore is expected to generate 0.49 times more return on investment than Mantengu Mining. However, Kumba Iron Ore is 2.04 times less risky than Mantengu Mining. It trades about 0.04 of its potential returns per unit of risk. Mantengu Mining is currently generating about -0.05 per unit of risk. If you would invest  3,298,700  in Kumba Iron Ore on December 24, 2024 and sell it today you would earn a total of  129,600  from holding Kumba Iron Ore or generate 3.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Kumba Iron Ore  vs.  Mantengu Mining

Kumba Iron Ore

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kumba Iron Ore are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Kumba Iron is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Mantengu Mining

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mantengu Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Kumba Iron and Mantengu Mining

The main advantage of trading using opposite Kumba Iron and Mantengu Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kumba Iron position performs unexpectedly, Mantengu Mining 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 Mantengu Mining will offset losses from the drop in Mantengu Mining's long position.

The idea behind Kumba Iron Ore and Mantengu Mining pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.