Correlation Between Kore Potash and E Media
Can any of the company-specific risk be diversified away by investing in both Kore Potash 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 Kore Potash and E Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kore Potash Plc and E Media Holdings, you can compare the effects of market volatilities on Kore Potash 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 Kore Potash with a short position of E Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kore Potash and E Media.
Diversification Opportunities for Kore Potash and E Media
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kore and EMH is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Kore Potash Plc 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 Kore Potash 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 Kore Potash Plc 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 Kore Potash i.e., Kore Potash and E Media go up and down completely randomly.
Pair Corralation between Kore Potash and E Media
Assuming the 90 days trading horizon Kore Potash Plc is expected to under-perform the E Media. In addition to that, Kore Potash is 47.48 times more volatile than E Media Holdings. It trades about -0.06 of its total potential returns per unit of risk. E Media Holdings is currently generating about 0.09 per unit of volatility. If you would invest 34,300 in E Media Holdings on September 1, 2024 and sell it today you would earn a total of 100.00 from holding E Media Holdings or generate 0.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Kore Potash Plc vs. E Media Holdings
Performance |
| Timeline |
| Kore Potash Plc |
| E Media Holdings |
Kore Potash and E Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kore Potash and E Media
The main advantage of trading using opposite Kore Potash and E Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kore Potash 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.The idea behind Kore Potash Plc and E Media Holdings 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.| E Media vs. MultiChoice Group | E Media vs. Sasol Ltd Bee | E Media vs. Growthpoint Properties | E Media vs. AfricaRhodium ETF |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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