Correlation Between African Media and Sibanye Stillwater
Can any of the company-specific risk be diversified away by investing in both African Media and Sibanye Stillwater 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 Sibanye Stillwater 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 Sibanye Stillwater, you can compare the effects of market volatilities on African Media and Sibanye Stillwater 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 Sibanye Stillwater. Check out your portfolio center. Please also check ongoing floating volatility patterns of African Media and Sibanye Stillwater.
Diversification Opportunities for African Media and Sibanye Stillwater
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between African and Sibanye is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding African Media Entertainment and Sibanye Stillwater in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sibanye Stillwater 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 Sibanye Stillwater. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sibanye Stillwater has no effect on the direction of African Media i.e., African Media and Sibanye Stillwater go up and down completely randomly.
Pair Corralation between African Media and Sibanye Stillwater
Assuming the 90 days trading horizon African Media Entertainment is expected to generate 17.21 times more return on investment than Sibanye Stillwater. However, African Media is 17.21 times more volatile than Sibanye Stillwater. It trades about 0.06 of its potential returns per unit of risk. Sibanye Stillwater is currently generating about 0.0 per unit of risk. If you would invest 313,457 in African Media Entertainment on September 2, 2024 and sell it today you would earn a total of 86,543 from holding African Media Entertainment or generate 27.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
African Media Entertainment vs. Sibanye Stillwater
Performance |
| Timeline |
| African Media Entert |
| Sibanye Stillwater |
African Media and Sibanye Stillwater Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with African Media and Sibanye Stillwater
The main advantage of trading using opposite African Media and Sibanye Stillwater positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if African Media position performs unexpectedly, Sibanye Stillwater 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 Sibanye Stillwater will offset losses from the drop in Sibanye Stillwater's long position.| African Media vs. Life Healthcare | African Media vs. Astoria Investments | African Media vs. Zeder Investments | African Media vs. Reinet Investments SCA |
| Sibanye Stillwater vs. Kumba Iron Ore | Sibanye Stillwater vs. Reinet Investments SCA | Sibanye Stillwater vs. Harmony Gold Mining | Sibanye Stillwater vs. Safari Investments RSA |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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