Correlation Between African Media and Wilson Bayly

Can any of the company-specific risk be diversified away by investing in both African Media and Wilson Bayly 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 Wilson Bayly 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 Wilson Bayly Holmes, you can compare the effects of market volatilities on African Media and Wilson Bayly 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 Wilson Bayly. Check out your portfolio center. Please also check ongoing floating volatility patterns of African Media and Wilson Bayly.

Diversification Opportunities for African Media and Wilson Bayly

0.05

Correlation Coefficient

African Media  Wilson Bayly

Significant diversification

The 3 months correlation between African and Wilson is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding African Media Entertainment and Wilson Bayly Holmes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilson Bayly Holmes 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 Wilson Bayly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilson Bayly Holmes has no effect on the direction of African Media i.e., African Media and Wilson Bayly go up and down completely randomly.

Pair Corralation between African Media and Wilson Bayly

Assuming the 90 days trading horizon African Media is expected to generate 1.78 times less return on investment than Wilson Bayly. In addition to that, African Media is 2.9 times more volatile than Wilson Bayly Holmes. It trades about 0.03 of its total potential returns per unit of risk. Wilson Bayly Holmes is currently generating about 0.17 per unit of volatility. If you would invest  1,652,800  in Wilson Bayly Holmes on September 29, 2024 and sell it today you would earn a total of  590,800  from holding Wilson Bayly Holmes or generate 35.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

African Media Entertainment  vs.  Wilson Bayly Holmes

African Media Entert

Risk-Adjusted Performance

1 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in African Media Entertainment are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, African Media is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Wilson Bayly Holmes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wilson Bayly Holmes has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Wilson Bayly is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with African Media and Wilson Bayly

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

The idea behind African Media Entertainment and Wilson Bayly Holmes 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.