Correlation Between Kap Industrial and EMedia Holdings
Can any of the company-specific risk be diversified away by investing in both Kap Industrial 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 Kap Industrial and EMedia Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kap Industrial Holdings and eMedia Holdings Limited, you can compare the effects of market volatilities on Kap Industrial 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 Kap Industrial with a short position of EMedia Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kap Industrial and EMedia Holdings.
Diversification Opportunities for Kap Industrial and EMedia Holdings
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Kap and EMedia is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Kap Industrial Holdings and eMedia Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eMedia Holdings and Kap Industrial 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 Kap Industrial Holdings 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 Kap Industrial i.e., Kap Industrial and EMedia Holdings go up and down completely randomly.
Pair Corralation between Kap Industrial and EMedia Holdings
Assuming the 90 days trading horizon Kap Industrial Holdings is expected to generate 0.73 times more return on investment than EMedia Holdings. However, Kap Industrial Holdings is 1.37 times less risky than EMedia Holdings. It trades about -0.14 of its potential returns per unit of risk. eMedia Holdings Limited is currently generating about -0.15 per unit of risk. If you would invest 29,300 in Kap Industrial Holdings on November 3, 2024 and sell it today you would lose (2,200) from holding Kap Industrial Holdings or give up 7.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kap Industrial Holdings vs. eMedia Holdings Limited
Performance |
| Timeline |
| Kap Industrial Holdings |
| eMedia Holdings |
Kap Industrial and EMedia Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kap Industrial and EMedia Holdings
The main advantage of trading using opposite Kap Industrial and EMedia Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kap Industrial 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.| Kap Industrial vs. Mantengu Mining | Kap Industrial vs. CA Sales Holdings | Kap Industrial vs. RCL Foods | Kap Industrial vs. Standard Bank Group |
| EMedia Holdings vs. Bytes Technology | EMedia Holdings vs. We Buy Cars | EMedia Holdings vs. Hosken Consolidated Investments | EMedia Holdings vs. Life Healthcare |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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