Correlation Between Sabvest Capital and Kumba Iron

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

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

Diversification Opportunities for Sabvest Capital and Kumba Iron

-0.07

Correlation Coefficient

Sabvest Capital  Kumba Iron

Good diversification

The 3 months correlation between Sabvest and Kumba is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Sabvest Capital 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 Sabvest Capital 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 Sabvest Capital 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 Sabvest Capital i.e., Sabvest Capital and Kumba Iron go up and down completely randomly.

Pair Corralation between Sabvest Capital and Kumba Iron

Assuming the 90 days trading horizon Sabvest Capital is expected to generate 0.86 times more return on investment than Kumba Iron. However, Sabvest Capital is 1.17 times less risky than Kumba Iron. It trades about 0.02 of its potential returns per unit of risk. Kumba Iron Ore is currently generating about 0.0 per unit of risk. If you would invest  813,024  in Sabvest Capital on December 4, 2024 and sell it today you would earn a total of  66,976  from holding Sabvest Capital or generate 8.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Sabvest Capital  vs.  Kumba Iron Ore

Sabvest Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sabvest Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Sabvest Capital 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

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kumba Iron Ore are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Kumba Iron may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Sabvest Capital and Kumba Iron

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

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.