Correlation Between E Media and Standard Bank
Can any of the company-specific risk be diversified away by investing in both E Media and Standard 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 Standard 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 Standard Bank Group, you can compare the effects of market volatilities on E Media and Standard 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 Standard Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of E Media and Standard Bank.
Diversification Opportunities for E Media and Standard Bank
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between EMH and Standard is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding E Media Holdings and Standard Bank Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Bank 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 Standard Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Bank Group has no effect on the direction of E Media i.e., E Media and Standard Bank go up and down completely randomly.
Pair Corralation between E Media and Standard Bank
Assuming the 90 days trading horizon E Media Holdings is expected to generate 1.46 times more return on investment than Standard Bank. However, E Media is 1.46 times more volatile than Standard Bank Group. It trades about 0.07 of its potential returns per unit of risk. Standard Bank Group is currently generating about -0.22 per unit of risk. If you would invest 34,200 in E Media Holdings on September 13, 2024 and sell it today you would earn a total of 800.00 from holding E Media Holdings or generate 2.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
E Media Holdings vs. Standard Bank Group
Performance |
| Timeline |
| E Media Holdings |
| Standard Bank Group |
E Media and Standard Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E Media and Standard Bank
The main advantage of trading using opposite E Media and Standard Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E Media position performs unexpectedly, Standard 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 Standard Bank will offset losses from the drop in Standard Bank's long position.| E Media vs. Blue Label Telecoms | E Media vs. Frontier Transport Holdings | E Media vs. Astoria Investments | E Media vs. ABSA Bank Limited |
| Standard Bank vs. MC Mining | Standard Bank vs. Bytes Technology | Standard Bank vs. Standard Bank Group | Standard Bank vs. We Buy Cars |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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