Correlation Between EMedia Holdings and Sasol

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Can any of the company-specific risk be diversified away by investing in both EMedia Holdings and Sasol 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 Sasol 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 Sasol Ltd Bee, you can compare the effects of market volatilities on EMedia Holdings and Sasol 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 Sasol. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMedia Holdings and Sasol.

Diversification Opportunities for EMedia Holdings and Sasol

0.03
  Correlation Coefficient

Significant diversification

The 3 months correlation between EMedia and Sasol is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding eMedia Holdings Limited and Sasol Ltd Bee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sasol Ltd Bee 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 Sasol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sasol Ltd Bee has no effect on the direction of EMedia Holdings i.e., EMedia Holdings and Sasol go up and down completely randomly.

Pair Corralation between EMedia Holdings and Sasol

Assuming the 90 days trading horizon eMedia Holdings Limited is expected to generate 0.96 times more return on investment than Sasol. However, eMedia Holdings Limited is 1.04 times less risky than Sasol. It trades about 0.04 of its potential returns per unit of risk. Sasol Ltd Bee is currently generating about -0.1 per unit of risk. If you would invest  30,500  in eMedia Holdings Limited on September 3, 2024 and sell it today you would earn a total of  2,500  from holding eMedia Holdings Limited or generate 8.2% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

eMedia Holdings Limited  vs.  Sasol Ltd Bee

 Performance 
       Timeline  
eMedia Holdings 

Risk-Adjusted Performance

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Weak
 
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Weak
Compared to the overall equity markets, risk-adjusted returns on investments in eMedia Holdings Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, EMedia Holdings is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.
Sasol Ltd Bee 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Sasol Ltd Bee has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Etf's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

EMedia Holdings and Sasol Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with EMedia Holdings and Sasol

The main advantage of trading using opposite EMedia Holdings and Sasol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMedia Holdings position performs unexpectedly, Sasol 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 Sasol will offset losses from the drop in Sasol's long position.
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The idea behind eMedia Holdings Limited and Sasol Ltd Bee pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.

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