Correlation Between African Media and Deneb Investments
Can any of the company-specific risk be diversified away by investing in both African Media and Deneb Investments 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 Deneb Investments 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 Deneb Investments, you can compare the effects of market volatilities on African Media and Deneb Investments 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 Deneb Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of African Media and Deneb Investments.
Diversification Opportunities for African Media and Deneb Investments
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between African and Deneb is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding African Media Entertainment and Deneb Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deneb Investments 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 Deneb Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deneb Investments has no effect on the direction of African Media i.e., African Media and Deneb Investments go up and down completely randomly.
Pair Corralation between African Media and Deneb Investments
Assuming the 90 days trading horizon African Media Entertainment is expected to under-perform the Deneb Investments. In addition to that, African Media is 1.23 times more volatile than Deneb Investments. It trades about -0.01 of its total potential returns per unit of risk. Deneb Investments is currently generating about 0.15 per unit of volatility. If you would invest 21,100 in Deneb Investments on August 28, 2024 and sell it today you would earn a total of 4,800 from holding Deneb Investments or generate 22.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
African Media Entertainment vs. Deneb Investments
Performance |
| Timeline |
| African Media Entert |
| Deneb Investments |
African Media and Deneb Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with African Media and Deneb Investments
The main advantage of trading using opposite African Media and Deneb Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if African Media position performs unexpectedly, Deneb Investments 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 Deneb Investments will offset losses from the drop in Deneb Investments' long position.| African Media vs. Sasol Ltd Bee | African Media vs. Growthpoint Properties | African Media vs. AfricaRhodium ETF | African Media vs. CoreShares Preference Share |
| Deneb Investments vs. Blue Label Telecoms | Deneb Investments vs. CA Sales Holdings | Deneb Investments vs. Allied Electronics | Deneb Investments vs. RCL Foods |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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