Correlation Between EMedia Holdings and Anglo American
Can any of the company-specific risk be diversified away by investing in both EMedia Holdings and Anglo American 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 Anglo American 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 Anglo American Platinum, you can compare the effects of market volatilities on EMedia Holdings and Anglo American 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 Anglo American. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMedia Holdings and Anglo American.
Diversification Opportunities for EMedia Holdings and Anglo American
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between EMedia and Anglo is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding eMedia Holdings Limited and Anglo American Platinum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anglo American Platinum 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 Anglo American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anglo American Platinum has no effect on the direction of EMedia Holdings i.e., EMedia Holdings and Anglo American go up and down completely randomly.
Pair Corralation between EMedia Holdings and Anglo American
Assuming the 90 days trading horizon eMedia Holdings Limited is expected to generate 0.75 times more return on investment than Anglo American. However, eMedia Holdings Limited is 1.34 times less risky than Anglo American. It trades about 0.01 of its potential returns per unit of risk. Anglo American Platinum is currently generating about -0.03 per unit of risk. If you would invest 35,000 in eMedia Holdings Limited on August 31, 2024 and sell it today you would lose (2,000) from holding eMedia Holdings Limited or give up 5.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
eMedia Holdings Limited vs. Anglo American Platinum
Performance |
| Timeline |
| eMedia Holdings |
| Anglo American Platinum |
EMedia Holdings and Anglo American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EMedia Holdings and Anglo American
The main advantage of trading using opposite EMedia Holdings and Anglo American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMedia Holdings position performs unexpectedly, Anglo American 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 Anglo American will offset losses from the drop in Anglo American's long position.| EMedia Holdings vs. CA Sales Holdings | EMedia Holdings vs. Astral Foods | EMedia Holdings vs. Astoria Investments | EMedia Holdings vs. ABSA Bank Limited |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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