Correlation Between African Media and EMedia Holdings
Can any of the company-specific risk be diversified away by investing in both African Media and EMedia Holdings 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 EMedia Holdings 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 eMedia Holdings Limited, you can compare the effects of market volatilities on African Media and EMedia Holdings 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 EMedia Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of African Media and EMedia Holdings.
Diversification Opportunities for African Media and EMedia Holdings
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between African and EMedia is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding African Media Entertainment and eMedia Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eMedia Holdings 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 EMedia Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eMedia Holdings has no effect on the direction of African Media i.e., African Media and EMedia Holdings go up and down completely randomly.
Pair Corralation between African Media and EMedia Holdings
Assuming the 90 days trading horizon African Media Entertainment is expected to under-perform the EMedia Holdings. In addition to that, African Media is 1.83 times more volatile than eMedia Holdings Limited. It trades about -0.04 of its total potential returns per unit of risk. eMedia Holdings Limited is currently generating about -0.04 per unit of volatility. If you would invest 33,600 in eMedia Holdings Limited on September 1, 2024 and sell it today you would lose (600.00) from holding eMedia Holdings Limited or give up 1.79% 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. eMedia Holdings Limited
Performance |
| Timeline |
| African Media Entert |
| eMedia Holdings |
African Media and EMedia Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with African Media and EMedia Holdings
The main advantage of trading using opposite African Media and EMedia Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if African Media position performs unexpectedly, EMedia Holdings 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 EMedia Holdings will offset losses from the drop in EMedia Holdings' long position.| African Media vs. Sasol Ltd Bee | African Media vs. Growthpoint Properties | African Media vs. AfricaRhodium ETF | African Media vs. CoreShares Preference Share |
| EMedia Holdings vs. MultiChoice Group | EMedia Holdings vs. Sasol Ltd Bee | EMedia Holdings vs. Growthpoint Properties | EMedia Holdings vs. AfricaRhodium ETF |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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