Correlation Between EMedia Holdings and ABSA Bank
Can any of the company-specific risk be diversified away by investing in both EMedia Holdings and ABSA 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 EMedia Holdings and ABSA Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between eMedia Holdings Limited and ABSA Bank Limited, you can compare the effects of market volatilities on EMedia Holdings and ABSA 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 EMedia Holdings with a short position of ABSA Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMedia Holdings and ABSA Bank.
Diversification Opportunities for EMedia Holdings and ABSA Bank
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between EMedia and ABSA is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding eMedia Holdings Limited and ABSA Bank Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABSA Bank Limited and EMedia Holdings 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 eMedia Holdings Limited are associated (or correlated) with ABSA Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABSA Bank Limited has no effect on the direction of EMedia Holdings i.e., EMedia Holdings and ABSA Bank go up and down completely randomly.
Pair Corralation between EMedia Holdings and ABSA Bank
Assuming the 90 days trading horizon eMedia Holdings Limited is expected to generate 50.34 times more return on investment than ABSA Bank. However, EMedia Holdings is 50.34 times more volatile than ABSA Bank Limited. It trades about 0.06 of its potential returns per unit of risk. ABSA Bank Limited is currently generating about 0.01 per unit of risk. If you would invest 32,257 in eMedia Holdings Limited on August 30, 2024 and sell it today you would earn a total of 743.00 from holding eMedia Holdings Limited or generate 2.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
eMedia Holdings Limited vs. ABSA Bank Limited
Performance |
| Timeline |
| eMedia Holdings |
| ABSA Bank Limited |
EMedia Holdings and ABSA Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EMedia Holdings and ABSA Bank
The main advantage of trading using opposite EMedia Holdings and ABSA Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMedia Holdings position performs unexpectedly, ABSA 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 ABSA Bank will offset losses from the drop in ABSA Bank's long position.| EMedia Holdings vs. Frontier Transport Holdings | EMedia Holdings vs. Harmony Gold Mining | EMedia Holdings vs. African Media Entertainment | EMedia Holdings vs. We Buy Cars |
| ABSA Bank vs. Capitec Bank Holdings | ABSA Bank vs. Standard Bank Group | ABSA Bank vs. Capitec Bank Holdings | ABSA Bank vs. Absa Group |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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