Correlation Between Investec and E Media
Can any of the company-specific risk be diversified away by investing in both Investec and E 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 Investec and E Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investec and E Media Holdings, you can compare the effects of market volatilities on Investec and E 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 Investec with a short position of E Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investec and E Media.
Diversification Opportunities for Investec and E Media
Average diversification
The 3 months correlation between Investec and EMH is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Investec and E Media Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E Media Holdings and Investec 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 Investec are associated (or correlated) with E Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E Media Holdings has no effect on the direction of Investec i.e., Investec and E Media go up and down completely randomly.
Pair Corralation between Investec and E Media
Assuming the 90 days trading horizon Investec is expected to under-perform the E Media. But the stock apears to be less risky and, when comparing its historical volatility, Investec is 3.05 times less risky than E Media. The stock trades about -0.06 of its potential returns per unit of risk. The E Media Holdings is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 35,500 in E Media Holdings on October 25, 2024 and sell it today you would earn a total of 500.00 from holding E Media Holdings or generate 1.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Investec vs. E Media Holdings
Performance |
| Timeline |
| Investec |
| E Media Holdings |
Investec and E Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investec and E Media
The main advantage of trading using opposite Investec and E Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investec position performs unexpectedly, E 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 E Media will offset losses from the drop in E Media's long position.| Investec vs. ABSA Bank Limited | Investec vs. Astral Foods | Investec vs. Mantengu Mining | Investec vs. Hosken Consolidated Investments |
| E Media vs. Reinet Investments SCA | E Media vs. Astoria Investments | E Media vs. Standard Bank Group | E Media vs. Bytes Technology |
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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