Correlation Between Mantengu Mining and Kumba Iron

Can any of the company-specific risk be diversified away by investing in both Mantengu Mining 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 Mantengu Mining and Kumba Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mantengu Mining and Kumba Iron Ore, you can compare the effects of market volatilities on Mantengu Mining 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 Mantengu Mining with a short position of Kumba Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mantengu Mining and Kumba Iron.

Diversification Opportunities for Mantengu Mining and Kumba Iron

0.34

Correlation Coefficient

Mantengu Mining  Kumba Iron

Weak diversification

The 3 months correlation between Mantengu and Kumba is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Mantengu Mining 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 Mantengu Mining 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 Mantengu Mining 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 Mantengu Mining i.e., Mantengu Mining and Kumba Iron go up and down completely randomly.

Pair Corralation between Mantengu Mining and Kumba Iron

Assuming the 90 days trading horizon Mantengu Mining is expected to under-perform the Kumba Iron. In addition to that, Mantengu Mining is 3.19 times more volatile than Kumba Iron Ore. It trades about -0.01 of its total potential returns per unit of risk. Kumba Iron Ore is currently generating about 0.47 per unit of volatility. If you would invest  3,220,000  in Kumba Iron Ore on October 23, 2024 and sell it today you would earn a total of  455,000  from holding Kumba Iron Ore or generate 14.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Mantengu Mining  vs.  Kumba Iron Ore

Mantengu Mining

Risk-Adjusted Performance

0 of 100

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 rather sound technical and fundamental indicators, Mantengu Mining is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Kumba Iron Ore

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kumba Iron Ore are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Kumba Iron may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Mantengu Mining and Kumba Iron

The main advantage of trading using opposite Mantengu Mining and Kumba Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mantengu Mining 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.

The idea behind Mantengu Mining and Kumba Iron Ore 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.