Correlation Between Deneb Investments and African Media
Can any of the company-specific risk be diversified away by investing in both Deneb Investments and African 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 Deneb Investments and African Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deneb Investments and African Media Entertainment, you can compare the effects of market volatilities on Deneb Investments and African 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 Deneb Investments with a short position of African Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deneb Investments and African Media.
Diversification Opportunities for Deneb Investments and African Media
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Deneb and African is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Deneb Investments and African Media Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on African Media Entert and Deneb Investments 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 Deneb Investments are associated (or correlated) with African Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of African Media Entert has no effect on the direction of Deneb Investments i.e., Deneb Investments and African Media go up and down completely randomly.
Pair Corralation between Deneb Investments and African Media
Assuming the 90 days trading horizon Deneb Investments is expected to generate 1.41 times more return on investment than African Media. However, Deneb Investments is 1.41 times more volatile than African Media Entertainment. It trades about 0.06 of its potential returns per unit of risk. African Media Entertainment is currently generating about 0.04 per unit of risk. If you would invest 22,073 in Deneb Investments on August 28, 2024 and sell it today you would earn a total of 3,827 from holding Deneb Investments or generate 17.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deneb Investments vs. African Media Entertainment
Performance |
| Timeline |
| Deneb Investments |
| African Media Entert |
Deneb Investments and African Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deneb Investments and African Media
The main advantage of trading using opposite Deneb Investments and African Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deneb Investments position performs unexpectedly, African 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 African Media will offset losses from the drop in African Media's long position.| Deneb Investments vs. Blue Label Telecoms | Deneb Investments vs. CA Sales Holdings | Deneb Investments vs. Allied Electronics | Deneb Investments vs. RCL Foods |
| African Media vs. Sasol Ltd Bee | African Media vs. Growthpoint Properties | African Media vs. AfricaRhodium ETF | African Media vs. CoreShares Preference Share |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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