Correlation Between Capitec Bank and EMedia Holdings
Can any of the company-specific risk be diversified away by investing in both Capitec Bank and EMedia Holdings 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 Capitec Bank and EMedia Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capitec Bank Holdings and eMedia Holdings Limited, you can compare the effects of market volatilities on Capitec Bank and EMedia Holdings 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 Capitec Bank with a short position of EMedia Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capitec Bank and EMedia Holdings.
Diversification Opportunities for Capitec Bank and EMedia Holdings
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Capitec and EMedia is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Capitec Bank Holdings and eMedia Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eMedia Holdings and Capitec Bank 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 Capitec Bank Holdings are associated (or correlated) with EMedia Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eMedia Holdings has no effect on the direction of Capitec Bank i.e., Capitec Bank and EMedia Holdings go up and down completely randomly.
Pair Corralation between Capitec Bank and EMedia Holdings
Assuming the 90 days trading horizon Capitec Bank Holdings is expected to generate 0.32 times more return on investment than EMedia Holdings. However, Capitec Bank Holdings is 3.13 times less risky than EMedia Holdings. It trades about -0.26 of its potential returns per unit of risk. eMedia Holdings Limited is currently generating about -0.24 per unit of risk. If you would invest 31,771,200 in Capitec Bank Holdings on October 22, 2024 and sell it today you would lose (1,552,800) from holding Capitec Bank Holdings or give up 4.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Capitec Bank Holdings vs. eMedia Holdings Limited
Performance |
| Timeline |
| Capitec Bank Holdings |
| eMedia Holdings |
Capitec Bank and EMedia Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capitec Bank and EMedia Holdings
The main advantage of trading using opposite Capitec Bank and EMedia Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capitec Bank position performs unexpectedly, EMedia Holdings 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 EMedia Holdings will offset losses from the drop in EMedia Holdings' long position.| Capitec Bank vs. Astral Foods | Capitec Bank vs. ABSA Bank Limited | Capitec Bank vs. Ascendis Health | Capitec Bank vs. Life Healthcare |
| EMedia Holdings vs. Hosken Consolidated Investments | EMedia Holdings vs. Copper 360 | EMedia Holdings vs. Bytes Technology | EMedia Holdings vs. Zeder 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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