Correlation Between EMedia Holdings and Pan African
Can any of the company-specific risk be diversified away by investing in both EMedia Holdings and Pan African 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 Pan African 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 Pan African Resources, you can compare the effects of market volatilities on EMedia Holdings and Pan African 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 Pan African. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMedia Holdings and Pan African.
Diversification Opportunities for EMedia Holdings and Pan African
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between EMedia and Pan is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding eMedia Holdings Limited and Pan African Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pan African Resources 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 Pan African. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pan African Resources has no effect on the direction of EMedia Holdings i.e., EMedia Holdings and Pan African go up and down completely randomly.
Pair Corralation between EMedia Holdings and Pan African
Assuming the 90 days trading horizon EMedia Holdings is expected to generate 15.89 times less return on investment than Pan African. In addition to that, EMedia Holdings is 1.03 times more volatile than Pan African Resources. It trades about 0.01 of its total potential returns per unit of risk. Pan African Resources is currently generating about 0.11 per unit of volatility. If you would invest 31,500 in Pan African Resources on September 1, 2024 and sell it today you would earn a total of 49,700 from holding Pan African Resources or generate 157.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
eMedia Holdings Limited vs. Pan African Resources
Performance |
| Timeline |
| eMedia Holdings |
| Pan African Resources |
EMedia Holdings and Pan African Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EMedia Holdings and Pan African
The main advantage of trading using opposite EMedia Holdings and Pan African positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMedia Holdings position performs unexpectedly, Pan African 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 Pan African will offset losses from the drop in Pan African's long position.| EMedia Holdings vs. MultiChoice Group | EMedia Holdings vs. E Media Holdings | EMedia Holdings vs. Sasol Ltd Bee | EMedia Holdings vs. Growthpoint Properties |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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