Correlation Between African Media and Aveng
Can any of the company-specific risk be diversified away by investing in both African Media and Aveng 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 African Media and Aveng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between African Media Entertainment and Aveng, you can compare the effects of market volatilities on African Media and Aveng 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 African Media with a short position of Aveng. Check out your portfolio center. Please also check ongoing floating volatility patterns of African Media and Aveng.
Diversification Opportunities for African Media and Aveng
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between African and Aveng is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding African Media Entertainment and Aveng in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aveng and African Media 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 African Media Entertainment are associated (or correlated) with Aveng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aveng has no effect on the direction of African Media i.e., African Media and Aveng go up and down completely randomly.
Pair Corralation between African Media and Aveng
Assuming the 90 days trading horizon African Media Entertainment is expected to generate 0.57 times more return on investment than Aveng. However, African Media Entertainment is 1.75 times less risky than Aveng. It trades about 0.0 of its potential returns per unit of risk. Aveng is currently generating about -0.19 per unit of risk. If you would invest 388,293 in African Media Entertainment on December 3, 2024 and sell it today you would lose (7,893) from holding African Media Entertainment or give up 2.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
African Media Entertainment vs. Aveng
Performance |
| Timeline |
| African Media Entert |
| Aveng |
African Media and Aveng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with African Media and Aveng
The main advantage of trading using opposite African Media and Aveng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if African Media position performs unexpectedly, Aveng 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 Aveng will offset losses from the drop in Aveng's long position.| African Media vs. Afine Investments | ||
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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.
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