Correlation Between British Amer and E Media
Can any of the company-specific risk be diversified away by investing in both British Amer and E Media 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 British Amer and E Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between British American Tobacco and E Media Holdings, you can compare the effects of market volatilities on British Amer and E Media 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 British Amer with a short position of E Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of British Amer and E Media.
Diversification Opportunities for British Amer and E Media
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between British and EMH is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and E Media Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E Media Holdings and British Amer 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 British American Tobacco are associated (or correlated) with E Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E Media Holdings has no effect on the direction of British Amer i.e., British Amer and E Media go up and down completely randomly.
Pair Corralation between British Amer and E Media
Assuming the 90 days trading horizon British American Tobacco is expected to generate 7.14 times more return on investment than E Media. However, British Amer is 7.14 times more volatile than E Media Holdings. It trades about 0.51 of its potential returns per unit of risk. E Media Holdings is currently generating about 0.09 per unit of risk. If you would invest 6,100,400 in British American Tobacco on September 1, 2024 and sell it today you would earn a total of 730,600 from holding British American Tobacco or generate 11.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
British American Tobacco vs. E Media Holdings
Performance |
| Timeline |
| British American Tobacco |
| E Media Holdings |
British Amer and E Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British Amer and E Media
The main advantage of trading using opposite British Amer and E Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British Amer position performs unexpectedly, E Media 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 E Media will offset losses from the drop in E Media's long position.| British Amer vs. Standard Bank Group | British Amer vs. Deneb Investments | British Amer vs. Ascendis Health | British Amer vs. Frontier Transport Holdings |
| E Media vs. MultiChoice Group | E Media vs. Sasol Ltd Bee | E Media vs. Growthpoint Properties | E Media 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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