Correlation Between Nedbank and EMedia Holdings
Can any of the company-specific risk be diversified away by investing in both Nedbank 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 Nedbank and EMedia Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nedbank Group and eMedia Holdings Limited, you can compare the effects of market volatilities on Nedbank 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 Nedbank with a short position of EMedia Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nedbank and EMedia Holdings.
Diversification Opportunities for Nedbank and EMedia Holdings
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nedbank and EMedia is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Nedbank Group and eMedia Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eMedia Holdings and Nedbank 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 Nedbank Group 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 Nedbank i.e., Nedbank and EMedia Holdings go up and down completely randomly.
Pair Corralation between Nedbank and EMedia Holdings
Assuming the 90 days trading horizon Nedbank Group is expected to generate 0.7 times more return on investment than EMedia Holdings. However, Nedbank Group is 1.42 times less risky than EMedia Holdings. It trades about 0.08 of its potential returns per unit of risk. eMedia Holdings Limited is currently generating about 0.05 per unit of risk. If you would invest 2,552,779 in Nedbank Group on September 13, 2024 and sell it today you would earn a total of 332,421 from holding Nedbank Group or generate 13.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nedbank Group vs. eMedia Holdings Limited
Performance |
| Timeline |
| Nedbank Group |
| eMedia Holdings |
Nedbank and EMedia Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nedbank and EMedia Holdings
The main advantage of trading using opposite Nedbank and EMedia Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nedbank 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.| Nedbank vs. ABSA Bank Limited | Nedbank vs. Capitec Bank Holdings | Nedbank vs. Standard Bank Group | Nedbank vs. Capitec Bank Holdings |
| EMedia Holdings vs. Hosken Consolidated Investments | EMedia Holdings vs. Deneb Investments | EMedia Holdings vs. Astoria Investments | EMedia Holdings vs. MC Mining |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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