Correlation Between E Media and Truworths International
Can any of the company-specific risk be diversified away by investing in both E Media and Truworths International 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 Truworths International 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 Truworths International, you can compare the effects of market volatilities on E Media and Truworths International 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 Truworths International. Check out your portfolio center. Please also check ongoing floating volatility patterns of E Media and Truworths International.
Diversification Opportunities for E Media and Truworths International
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between EMH and Truworths is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding E Media Holdings and Truworths International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Truworths International 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 Truworths International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Truworths International has no effect on the direction of E Media i.e., E Media and Truworths International go up and down completely randomly.
Pair Corralation between E Media and Truworths International
Assuming the 90 days trading horizon E Media is expected to generate 3.27 times less return on investment than Truworths International. In addition to that, E Media is 1.56 times more volatile than Truworths International. It trades about 0.02 of its total potential returns per unit of risk. Truworths International is currently generating about 0.11 per unit of volatility. If you would invest 775,600 in Truworths International on September 2, 2024 and sell it today you would earn a total of 245,000 from holding Truworths International or generate 31.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
E Media Holdings vs. Truworths International
Performance |
| Timeline |
| E Media Holdings |
| Truworths International |
E Media and Truworths International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E Media and Truworths International
The main advantage of trading using opposite E Media and Truworths International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E Media position performs unexpectedly, Truworths International 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 Truworths International will offset losses from the drop in Truworths International's long position.| E Media vs. Brimstone Investment | E Media vs. Astoria Investments | E Media vs. HomeChoice Investments | E Media vs. British American Tobacco |
| Truworths International vs. City Lodge Hotels | Truworths International vs. eMedia Holdings Limited | Truworths International vs. ABSA Bank Limited | Truworths International vs. Reinet Investments SCA |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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