Correlation Between African Media and Sygnia

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

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

Diversification Opportunities for African Media and Sygnia

0.0

Correlation Coefficient

African Media  Sygnia

Pay attention - limited upside

The 3 months correlation between African and Sygnia is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding African Media Entertainment and Sygnia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sygnia and African Media 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 African Media Entertainment are associated (or correlated) with Sygnia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sygnia has no effect on the direction of African Media i.e., African Media and Sygnia go up and down completely randomly.

Pair Corralation between African Media and Sygnia

Assuming the 90 days trading horizon African Media Entertainment is expected to generate 22.07 times more return on investment than Sygnia. However, African Media is 22.07 times more volatile than Sygnia. It trades about 0.04 of its potential returns per unit of risk. Sygnia is currently generating about 0.03 per unit of risk. If you would invest  272,280  in African Media Entertainment on October 12, 2024 and sell it today you would earn a total of  130,220  from holding African Media Entertainment or generate 47.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.98%
Values	Daily Returns

African Media Entertainment  vs.  Sygnia

African Media Entert

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in African Media Entertainment are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, African Media may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Sygnia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sygnia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with African Media and Sygnia

The main advantage of trading using opposite African Media and Sygnia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if African Media position performs unexpectedly, Sygnia 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 Sygnia will offset losses from the drop in Sygnia's long position.

The idea behind African Media Entertainment and Sygnia 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.