Correlation Between HomeChoice Investments and EMedia Holdings
Can any of the company-specific risk be diversified away by investing in both HomeChoice Investments and EMedia Holdings 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 HomeChoice Investments and EMedia Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HomeChoice Investments and eMedia Holdings Limited, you can compare the effects of market volatilities on HomeChoice Investments and EMedia Holdings 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 HomeChoice Investments with a short position of EMedia Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of HomeChoice Investments and EMedia Holdings.
Diversification Opportunities for HomeChoice Investments and EMedia Holdings
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between HomeChoice and EMedia is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding HomeChoice Investments and eMedia Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eMedia Holdings and HomeChoice Investments 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 HomeChoice Investments are associated (or correlated) with EMedia Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eMedia Holdings has no effect on the direction of HomeChoice Investments i.e., HomeChoice Investments and EMedia Holdings go up and down completely randomly.
Pair Corralation between HomeChoice Investments and EMedia Holdings
Assuming the 90 days trading horizon HomeChoice Investments is expected to generate 2.11 times more return on investment than EMedia Holdings. However, HomeChoice Investments is 2.11 times more volatile than eMedia Holdings Limited. It trades about -0.09 of its potential returns per unit of risk. eMedia Holdings Limited is currently generating about -0.34 per unit of risk. If you would invest 380,000 in HomeChoice Investments on August 24, 2024 and sell it today you would lose (25,000) from holding HomeChoice Investments or give up 6.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
HomeChoice Investments vs. eMedia Holdings Limited
Performance |
| Timeline |
| HomeChoice Investments |
| eMedia Holdings |
HomeChoice Investments and EMedia Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HomeChoice Investments and EMedia Holdings
The main advantage of trading using opposite HomeChoice Investments and EMedia Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HomeChoice Investments position performs unexpectedly, EMedia Holdings 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 EMedia Holdings will offset losses from the drop in EMedia Holdings' long position.| HomeChoice Investments vs. Safari Investments RSA | HomeChoice Investments vs. Standard Bank Group | HomeChoice Investments vs. Zeder Investments | HomeChoice Investments vs. City Lodge Hotels |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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