Correlation Between E Media and MultiChoice
Can any of the company-specific risk be diversified away by investing in both E Media and MultiChoice 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 MultiChoice 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 MultiChoice Group, you can compare the effects of market volatilities on E Media and MultiChoice 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 MultiChoice. Check out your portfolio center. Please also check ongoing floating volatility patterns of E Media and MultiChoice.
Diversification Opportunities for E Media and MultiChoice
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between EMH and MultiChoice is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding E Media Holdings and MultiChoice Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MultiChoice Group 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 MultiChoice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MultiChoice Group has no effect on the direction of E Media i.e., E Media and MultiChoice go up and down completely randomly.
Pair Corralation between E Media and MultiChoice
Assuming the 90 days trading horizon E Media Holdings is expected to generate 0.32 times more return on investment than MultiChoice. However, E Media Holdings is 3.08 times less risky than MultiChoice. It trades about 0.1 of its potential returns per unit of risk. MultiChoice Group is currently generating about -0.42 per unit of risk. If you would invest 34,300 in E Media Holdings on September 3, 2024 and sell it today you would earn a total of 100.00 from holding E Media Holdings or generate 0.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
E Media Holdings vs. MultiChoice Group
Performance |
| Timeline |
| E Media Holdings |
| MultiChoice Group |
E Media and MultiChoice Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E Media and MultiChoice
The main advantage of trading using opposite E Media and MultiChoice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E Media position performs unexpectedly, MultiChoice 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 MultiChoice will offset losses from the drop in MultiChoice's long position.| E Media vs. eMedia Holdings Limited | E Media vs. Sasol Ltd Bee | E Media vs. Centaur Bci Balanced | E Media vs. Sabvest Capital |
| MultiChoice vs. eMedia Holdings Limited | MultiChoice vs. Sasol Ltd Bee | MultiChoice vs. Centaur Bci Balanced | MultiChoice vs. Sabvest Capital |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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