Correlation Between EMedia Holdings and African Media
Can any of the company-specific risk be diversified away by investing in both EMedia Holdings and African Media 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 African Media 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 African Media Entertainment, you can compare the effects of market volatilities on EMedia Holdings and African Media 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 African Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMedia Holdings and African Media.
Diversification Opportunities for EMedia Holdings and African Media
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between EMedia and African is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding eMedia Holdings Limited and African Media Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on African Media Entert 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 African Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of African Media Entert has no effect on the direction of EMedia Holdings i.e., EMedia Holdings and African Media go up and down completely randomly.
Pair Corralation between EMedia Holdings and African Media
Assuming the 90 days trading horizon eMedia Holdings Limited is expected to under-perform the African Media. In addition to that, EMedia Holdings is 2.09 times more volatile than African Media Entertainment. It trades about -0.15 of its total potential returns per unit of risk. African Media Entertainment is currently generating about -0.03 per unit of volatility. If you would invest 405,000 in African Media Entertainment on November 3, 2024 and sell it today you would lose (5,100) from holding African Media Entertainment or give up 1.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
eMedia Holdings Limited vs. African Media Entertainment
Performance |
| Timeline |
| eMedia Holdings |
| African Media Entert |
EMedia Holdings and African Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EMedia Holdings and African Media
The main advantage of trading using opposite EMedia Holdings and African Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMedia Holdings position performs unexpectedly, African Media 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 African Media will offset losses from the drop in African Media's long position.| EMedia Holdings vs. Bytes Technology | EMedia Holdings vs. We Buy Cars | EMedia Holdings vs. Hosken Consolidated Investments | EMedia Holdings vs. Life Healthcare |
| African Media vs. Sasol Ltd Bee | African Media vs. Sabvest Capital | African Media vs. Growthpoint Properties | African Media vs. Coronation Global Equity |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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