Correlation Between Coronation Global and E Media

Can any of the company-specific risk be diversified away by investing in both Coronation Global 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 Coronation Global and E Media into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Coronation Global Equity and E Media Holdings, you can compare the effects of market volatilities on Coronation Global 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 Coronation Global with a short position of E Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coronation Global and E Media.

Diversification Opportunities for Coronation Global and E Media

0.22

Correlation Coefficient

Coronation Global  E Media

Modest diversification

The 3 months correlation between Coronation and EMH is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Coronation Global Equity 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 Coronation Global 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 Coronation Global Equity 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 Coronation Global i.e., Coronation Global and E Media go up and down completely randomly.

Pair Corralation between Coronation Global and E Media

Assuming the 90 days trading horizon Coronation Global is expected to generate 22.87 times less return on investment than E Media. But when comparing it to its historical volatility, Coronation Global Equity is 42.21 times less risky than E Media. It trades about 0.08 of its potential returns per unit of risk. E Media Holdings is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  37,732  in E Media Holdings on October 7, 2024 and sell it today you would lose (2,232) from holding E Media Holdings or give up 5.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Coronation Global Equity  vs.  E Media Holdings

Coronation Global Equity

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Coronation Global Equity are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, Coronation Global sustained solid returns over the last few months and may actually be approaching a breakup point.

E Media Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in E Media Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, E Media may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Coronation Global and E Media

The main advantage of trading using opposite Coronation Global and E Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coronation Global 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 Coronation Global Equity 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.

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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 Anywhere module to track or share privately all of your investments from the convenience of any device.