Correlation Between E Media and Astral Foods
Can any of the company-specific risk be diversified away by investing in both E Media and Astral Foods 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 Astral Foods 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 Astral Foods, you can compare the effects of market volatilities on E Media and Astral Foods 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 Astral Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of E Media and Astral Foods.
Diversification Opportunities for E Media and Astral Foods
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between EMH and Astral is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding E Media Holdings and Astral Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astral Foods 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 Astral Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astral Foods has no effect on the direction of E Media i.e., E Media and Astral Foods go up and down completely randomly.
Pair Corralation between E Media and Astral Foods
Assuming the 90 days trading horizon E Media is expected to generate 195.48 times less return on investment than Astral Foods. But when comparing it to its historical volatility, E Media Holdings is 25.6 times less risky than Astral Foods. It trades about 0.01 of its potential returns per unit of risk. Astral Foods is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,569,800 in Astral Foods on August 24, 2024 and sell it today you would earn a total of 328,900 from holding Astral Foods or generate 20.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.28% |
| Values | Daily Returns |
E Media Holdings vs. Astral Foods
Performance |
| Timeline |
| E Media Holdings |
| Astral Foods |
E Media and Astral Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E Media and Astral Foods
The main advantage of trading using opposite E Media and Astral Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E Media position performs unexpectedly, Astral Foods 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 Astral Foods will offset losses from the drop in Astral Foods' long position.| E Media vs. Zeder Investments | E Media vs. Blue Label Telecoms | E Media vs. Safari Investments RSA | E Media vs. Capitec Bank Holdings |
| Astral Foods vs. Prosus NV | Astral Foods vs. Compagnie Financire Richemont | Astral Foods vs. British American Tobacco | Astral Foods vs. Glencore PLC |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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