Correlation Between Old Mutual and E Media
Can any of the company-specific risk be diversified away by investing in both Old Mutual 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 Old Mutual and E Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Mutual and E Media Holdings, you can compare the effects of market volatilities on Old Mutual 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 Old Mutual with a short position of E Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Mutual and E Media.
Diversification Opportunities for Old Mutual and E Media
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Old and EMH is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Old Mutual 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 Old Mutual 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 Old Mutual 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 Old Mutual i.e., Old Mutual and E Media go up and down completely randomly.
Pair Corralation between Old Mutual and E Media
Assuming the 90 days trading horizon Old Mutual is expected to generate 1.96 times less return on investment than E Media. But when comparing it to its historical volatility, Old Mutual is 1.45 times less risky than E Media. It trades about 0.16 of its potential returns per unit of risk. E Media Holdings is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 34,300 in E Media Holdings on September 12, 2024 and sell it today you would earn a total of 2,100 from holding E Media Holdings or generate 6.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Mutual vs. E Media Holdings
Performance |
| Timeline |
| Old Mutual |
| E Media Holdings |
Old Mutual and E Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Mutual and E Media
The main advantage of trading using opposite Old Mutual and E Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Mutual 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.| Old Mutual vs. E Media Holdings | Old Mutual vs. Harmony Gold Mining | Old Mutual vs. Astral Foods | Old Mutual vs. Deneb Investments |
| E Media vs. eMedia Holdings Limited | E Media vs. Sasol Ltd Bee | E Media vs. Centaur Bci Balanced | E Media vs. Sabvest Capital |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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