Correlation Between E Media and AECI
Can any of the company-specific risk be diversified away by investing in both E Media and AECI 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 E Media and AECI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between E Media Holdings and AECI, you can compare the effects of market volatilities on E Media and AECI 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 E Media with a short position of AECI. Check out your portfolio center. Please also check ongoing floating volatility patterns of E Media and AECI.
Diversification Opportunities for E Media and AECI
Good diversification
The 3 months correlation between EMH and AECI is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding E Media Holdings and AECI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AECI and E 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 E Media Holdings are associated (or correlated) with AECI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AECI has no effect on the direction of E Media i.e., E Media and AECI go up and down completely randomly.
Pair Corralation between E Media and AECI
Assuming the 90 days trading horizon E Media Holdings is expected to generate 50.65 times more return on investment than AECI. However, E Media is 50.65 times more volatile than AECI. It trades about 0.07 of its potential returns per unit of risk. AECI is currently generating about 0.02 per unit of risk. If you would invest 294.00 in E Media Holdings on August 28, 2024 and sell it today you would earn a total of 34,106 from holding E Media Holdings or generate 11600.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
E Media Holdings vs. AECI
Performance |
| Timeline |
| E Media Holdings |
| AECI |
E Media and AECI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E Media and AECI
The main advantage of trading using opposite E Media and AECI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E Media position performs unexpectedly, AECI 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 AECI will offset losses from the drop in AECI's long position.| E Media vs. Reinet Investments SCA | E Media vs. Safari Investments RSA | E Media vs. Kap Industrial Holdings | E Media vs. Deneb Investments |
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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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