Correlation Between E Media and Safari Investments
Can any of the company-specific risk be diversified away by investing in both E Media and Safari Investments 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 Safari Investments 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 Safari Investments RSA, you can compare the effects of market volatilities on E Media and Safari Investments 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 Safari Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of E Media and Safari Investments.
Diversification Opportunities for E Media and Safari Investments
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between EMH and Safari is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding E Media Holdings and Safari Investments RSA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safari Investments RSA 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 Safari Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safari Investments RSA has no effect on the direction of E Media i.e., E Media and Safari Investments go up and down completely randomly.
Pair Corralation between E Media and Safari Investments
Assuming the 90 days trading horizon E Media Holdings is expected to generate 15.78 times more return on investment than Safari Investments. However, E Media is 15.78 times more volatile than Safari Investments RSA. It trades about 0.04 of its potential returns per unit of risk. Safari Investments RSA is currently generating about 0.03 per unit of risk. If you would invest 34,233 in E Media Holdings on November 2, 2024 and sell it today you would earn a total of 1,267 from holding E Media Holdings or generate 3.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.19% |
| Values | Daily Returns |
E Media Holdings vs. Safari Investments RSA
Performance |
| Timeline |
| E Media Holdings |
| Safari Investments RSA |
E Media and Safari Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E Media and Safari Investments
The main advantage of trading using opposite E Media and Safari Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E Media position performs unexpectedly, Safari Investments 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 Safari Investments will offset losses from the drop in Safari Investments' long position.| E Media vs. Frontier Transport Holdings | E Media vs. Nedbank Group | E Media vs. Harmony Gold Mining | E Media vs. Lesaka Technologies |
| Safari Investments vs. Kap Industrial Holdings | Safari Investments vs. Boxer Retail | Safari Investments vs. Bytes Technology | Safari Investments vs. CA Sales Holdings |
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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