Correlation Between African Media and Tiger Brands
Can any of the company-specific risk be diversified away by investing in both African Media and Tiger Brands 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 Tiger Brands 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 Tiger Brands, you can compare the effects of market volatilities on African Media and Tiger Brands 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 Tiger Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of African Media and Tiger Brands.
Diversification Opportunities for African Media and Tiger Brands
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between African and Tiger is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding African Media Entertainment and Tiger Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiger Brands 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 Tiger Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tiger Brands has no effect on the direction of African Media i.e., African Media and Tiger Brands go up and down completely randomly.
Pair Corralation between African Media and Tiger Brands
Assuming the 90 days trading horizon African Media Entertainment is expected to generate 32.56 times more return on investment than Tiger Brands. However, African Media is 32.56 times more volatile than Tiger Brands. It trades about 0.05 of its potential returns per unit of risk. Tiger Brands is currently generating about 0.08 per unit of risk. If you would invest 263,583 in African Media Entertainment on September 1, 2024 and sell it today you would earn a total of 136,417 from holding African Media Entertainment or generate 51.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
African Media Entertainment vs. Tiger Brands
Performance |
| Timeline |
| African Media Entert |
| Tiger Brands |
African Media and Tiger Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with African Media and Tiger Brands
The main advantage of trading using opposite African Media and Tiger Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if African Media position performs unexpectedly, Tiger Brands 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 Tiger Brands will offset losses from the drop in Tiger Brands' long position.| African Media vs. Sasol Ltd Bee | African Media vs. Growthpoint Properties | African Media vs. AfricaRhodium ETF | African Media vs. CoreShares Preference Share |
| Tiger Brands vs. RCL Foods | Tiger Brands vs. Reinet Investments SCA | Tiger Brands vs. Allied Electronics | Tiger Brands vs. HomeChoice Investments |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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