Correlation Between Life Healthcare and EMedia Holdings
Can any of the company-specific risk be diversified away by investing in both Life Healthcare 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 Life Healthcare and EMedia Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Life Healthcare and eMedia Holdings Limited, you can compare the effects of market volatilities on Life Healthcare 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 Life Healthcare with a short position of EMedia Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Healthcare and EMedia Holdings.
Diversification Opportunities for Life Healthcare and EMedia Holdings
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Life and EMedia is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Life Healthcare and eMedia Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eMedia Holdings and Life Healthcare 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 Life Healthcare 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 Life Healthcare i.e., Life Healthcare and EMedia Holdings go up and down completely randomly.
Pair Corralation between Life Healthcare and EMedia Holdings
Assuming the 90 days trading horizon Life Healthcare is expected to generate 0.99 times more return on investment than EMedia Holdings. However, Life Healthcare is 1.01 times less risky than EMedia Holdings. 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 167,800 in Life Healthcare on August 24, 2024 and sell it today you would earn a total of 4,600 from holding Life Healthcare or generate 2.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Life Healthcare vs. eMedia Holdings Limited
Performance |
| Timeline |
| Life Healthcare |
| eMedia Holdings |
Life Healthcare and EMedia Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Life Healthcare and EMedia Holdings
The main advantage of trading using opposite Life Healthcare and EMedia Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Life Healthcare 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.| Life Healthcare vs. AfroCentric Investment Corp | Life Healthcare vs. Centaur Bci Balanced | Life Healthcare vs. Growthpoint Properties | Life Healthcare vs. Bowler Metcalf |
| EMedia Holdings vs. E Media Holdings | EMedia Holdings vs. Centaur Bci Balanced | EMedia Holdings vs. Growthpoint Properties | EMedia Holdings vs. Bowler Metcalf |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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