Correlation Between ABSA Bank and E Media
Can any of the company-specific risk be diversified away by investing in both ABSA Bank and E 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 ABSA Bank and E Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ABSA Bank Limited and E Media Holdings, you can compare the effects of market volatilities on ABSA Bank and E 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 ABSA Bank with a short position of E Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABSA Bank and E Media.
Diversification Opportunities for ABSA Bank and E Media
Very good diversification
The 3 months correlation between ABSA and EMH is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding ABSA Bank Limited and E Media Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E Media Holdings and ABSA Bank 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 ABSA Bank Limited are associated (or correlated) with E Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E Media Holdings has no effect on the direction of ABSA Bank i.e., ABSA Bank and E Media go up and down completely randomly.
Pair Corralation between ABSA Bank and E Media
Assuming the 90 days trading horizon ABSA Bank is expected to generate 1.19 times less return on investment than E Media. But when comparing it to its historical volatility, ABSA Bank Limited is 3.06 times less risky than E Media. It trades about 0.04 of its potential returns per unit of risk. E Media Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 34,989 in E Media Holdings on August 31, 2024 and sell it today you would lose (589.00) from holding E Media Holdings or give up 1.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
ABSA Bank Limited vs. E Media Holdings
Performance |
| Timeline |
| ABSA Bank Limited |
| E Media Holdings |
ABSA Bank and E Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ABSA Bank and E Media
The main advantage of trading using opposite ABSA Bank and E Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABSA Bank position performs unexpectedly, E 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 E Media will offset losses from the drop in E Media's long position.| ABSA Bank vs. Bytes Technology | ABSA Bank vs. Hosken Consolidated Investments | ABSA Bank vs. CA Sales Holdings | ABSA Bank vs. Trematon Capital Investments |
| E Media vs. CA Sales Holdings | E Media vs. Allied Electronics | E Media vs. Zeder Investments | E Media vs. Afine Investments |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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