Correlation Between African Media and Sabvest Capital
Can any of the company-specific risk be diversified away by investing in both African Media and Sabvest Capital 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 Sabvest Capital 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 Sabvest Capital, you can compare the effects of market volatilities on African Media and Sabvest Capital 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 Sabvest Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of African Media and Sabvest Capital.
Diversification Opportunities for African Media and Sabvest Capital
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between African and Sabvest is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding African Media Entertainment and Sabvest Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabvest Capital 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 Sabvest Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabvest Capital has no effect on the direction of African Media i.e., African Media and Sabvest Capital go up and down completely randomly.
Pair Corralation between African Media and Sabvest Capital
Assuming the 90 days trading horizon African Media Entertainment is expected to generate 22.2 times more return on investment than Sabvest Capital. However, African Media is 22.2 times more volatile than Sabvest Capital. It trades about 0.05 of its potential returns per unit of risk. Sabvest Capital is currently generating about 0.02 per unit of risk. If you would invest 272,077 in African Media Entertainment on August 27, 2024 and sell it today you would earn a total of 117,923 from holding African Media Entertainment or generate 43.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.78% |
| Values | Daily Returns |
African Media Entertainment vs. Sabvest Capital
Performance |
| Timeline |
| African Media Entert |
| Sabvest Capital |
African Media and Sabvest Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with African Media and Sabvest Capital
The main advantage of trading using opposite African Media and Sabvest Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if African Media position performs unexpectedly, Sabvest Capital 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 Sabvest Capital will offset losses from the drop in Sabvest Capital's long position.| African Media vs. Sasol Ltd Bee | African Media vs. Growthpoint Properties | African Media vs. AfricaRhodium ETF | African Media vs. CoreShares Preference Share |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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