Correlation Between Dis Chem and E Media
Can any of the company-specific risk be diversified away by investing in both Dis Chem 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 Dis Chem and E Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dis Chem Pharmacies and E Media Holdings, you can compare the effects of market volatilities on Dis Chem 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 Dis Chem with a short position of E Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dis Chem and E Media.
Diversification Opportunities for Dis Chem and E Media
Modest diversification
The 3 months correlation between Dis and EMH is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Dis Chem Pharmacies 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 Dis Chem 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 Dis Chem Pharmacies 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 Dis Chem i.e., Dis Chem and E Media go up and down completely randomly.
Pair Corralation between Dis Chem and E Media
Assuming the 90 days trading horizon Dis Chem Pharmacies is expected to generate 0.38 times more return on investment than E Media. However, Dis Chem Pharmacies is 2.64 times less risky than E Media. It trades about -0.06 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 336,500 in Dis Chem Pharmacies on November 28, 2024 and sell it today you would lose (6,500) from holding Dis Chem Pharmacies or give up 1.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dis Chem Pharmacies vs. E Media Holdings
Performance |
| Timeline |
| Dis Chem Pharmacies |
| E Media Holdings |
Dis Chem and E Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dis Chem and E Media
The main advantage of trading using opposite Dis Chem and E Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dis Chem 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.| Dis Chem vs. CA Sales Holdings | Dis Chem vs. Zeder Investments | Dis Chem vs. Hosken Consolidated Investments | Dis Chem vs. Astoria Investments |
| E Media vs. Kumba Iron Ore | E Media vs. ABSA Bank Limited | E Media vs. Afine Investments | E Media vs. Bytes Technology |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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