Correlation Between Trematon Capital and African Media
Can any of the company-specific risk be diversified away by investing in both Trematon Capital and African 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 Trematon Capital and African Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trematon Capital Investments and African Media Entertainment, you can compare the effects of market volatilities on Trematon Capital and African 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 Trematon Capital with a short position of African Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trematon Capital and African Media.
Diversification Opportunities for Trematon Capital and African Media
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Trematon and African is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Trematon Capital Investments and African Media Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on African Media Entert and Trematon Capital 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 Trematon Capital Investments are associated (or correlated) with African Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of African Media Entert has no effect on the direction of Trematon Capital i.e., Trematon Capital and African Media go up and down completely randomly.
Pair Corralation between Trematon Capital and African Media
Assuming the 90 days trading horizon Trematon Capital Investments is expected to under-perform the African Media. But the stock apears to be less risky and, when comparing its historical volatility, Trematon Capital Investments is 1.07 times less risky than African Media. The stock trades about -0.09 of its potential returns per unit of risk. The African Media Entertainment is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 416,000 in African Media Entertainment on September 1, 2024 and sell it today you would lose (16,000) from holding African Media Entertainment or give up 3.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Trematon Capital Investments vs. African Media Entertainment
Performance |
| Timeline |
| Trematon Capital Inv |
| African Media Entert |
Trematon Capital and African Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trematon Capital and African Media
The main advantage of trading using opposite Trematon Capital and African Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trematon Capital position performs unexpectedly, African 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 African Media will offset losses from the drop in African Media's long position.| Trematon Capital vs. Afine Investments | Trematon Capital vs. E Media Holdings | Trematon Capital vs. Master Drilling Group | Trematon Capital vs. African Media Entertainment |
| African Media vs. Sasol Ltd Bee | African Media vs. Growthpoint Properties | African Media vs. AfricaRhodium ETF | African Media vs. CoreShares Preference Share |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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