Correlation Between African Media and Trematon Capital
Can any of the company-specific risk be diversified away by investing in both African Media and Trematon 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 Trematon 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 Trematon Capital Investments, you can compare the effects of market volatilities on African Media and Trematon 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 Trematon Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of African Media and Trematon Capital.
Diversification Opportunities for African Media and Trematon Capital
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between African and Trematon is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding African Media Entertainment and Trematon Capital Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trematon Capital Inv 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 Trematon Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trematon Capital Inv has no effect on the direction of African Media i.e., African Media and Trematon Capital go up and down completely randomly.
Pair Corralation between African Media and Trematon Capital
Assuming the 90 days trading horizon African Media Entertainment is expected to generate 1.07 times more return on investment than Trematon Capital. However, African Media is 1.07 times more volatile than Trematon Capital Investments. It trades about -0.04 of its potential returns per unit of risk. Trematon Capital Investments is currently generating about -0.09 per unit of risk. If you would invest 416,000 in African Media Entertainment on September 1, 2024 and sell it today you would lose (16,000) from holding African Media Entertainment or give up 3.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
African Media Entertainment vs. Trematon Capital Investments
Performance |
| Timeline |
| African Media Entert |
| Trematon Capital Inv |
African Media and Trematon Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with African Media and Trematon Capital
The main advantage of trading using opposite African Media and Trematon Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if African Media position performs unexpectedly, Trematon 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 Trematon Capital will offset losses from the drop in Trematon 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 |
| Trematon Capital vs. Afine Investments | Trematon Capital vs. E Media Holdings | Trematon Capital vs. Master Drilling Group | Trematon Capital vs. African Media Entertainment |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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