Correlation Between E Media and Capitec Bank
Can any of the company-specific risk be diversified away by investing in both E Media and Capitec Bank 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 Capitec Bank 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 Capitec Bank Holdings, you can compare the effects of market volatilities on E Media and Capitec Bank 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 Capitec Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of E Media and Capitec Bank.
Diversification Opportunities for E Media and Capitec Bank
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between EMH and Capitec is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding E Media Holdings and Capitec Bank Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitec Bank Holdings 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 Capitec Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitec Bank Holdings has no effect on the direction of E Media i.e., E Media and Capitec Bank go up and down completely randomly.
Pair Corralation between E Media and Capitec Bank
Assuming the 90 days trading horizon E Media Holdings is expected to generate 26.89 times more return on investment than Capitec Bank. However, E Media is 26.89 times more volatile than Capitec Bank Holdings. It trades about 0.04 of its potential returns per unit of risk. Capitec Bank Holdings is currently generating about 0.08 per unit of risk. If you would invest 37,826 in E Media Holdings on August 28, 2024 and sell it today you would lose (3,426) from holding E Media Holdings or give up 9.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
E Media Holdings vs. Capitec Bank Holdings
Performance |
| Timeline |
| E Media Holdings |
| Capitec Bank Holdings |
E Media and Capitec Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E Media and Capitec Bank
The main advantage of trading using opposite E Media and Capitec Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E Media position performs unexpectedly, Capitec Bank 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 Capitec Bank will offset losses from the drop in Capitec Bank's long position.| E Media vs. Allied Electronics | E Media vs. Advtech | E Media vs. Hosken Consolidated Investments | E Media vs. Frontier Transport Holdings |
| Capitec Bank vs. Kumba Iron Ore | Capitec Bank vs. HomeChoice Investments | Capitec Bank vs. Frontier Transport Holdings | Capitec Bank vs. Afine 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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