Correlation Between African Media and Zeder Investments
Can any of the company-specific risk be diversified away by investing in both African Media and Zeder Investments 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 Zeder Investments 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 Zeder Investments, you can compare the effects of market volatilities on African Media and Zeder Investments 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 Zeder Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of African Media and Zeder Investments.
Diversification Opportunities for African Media and Zeder Investments
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between African and Zeder is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding African Media Entertainment and Zeder Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zeder Investments 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 Zeder Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zeder Investments has no effect on the direction of African Media i.e., African Media and Zeder Investments go up and down completely randomly.
Pair Corralation between African Media and Zeder Investments
Assuming the 90 days trading horizon African Media Entertainment is expected to generate 1.08 times more return on investment than Zeder Investments. However, African Media is 1.08 times more volatile than Zeder Investments. It trades about 0.07 of its potential returns per unit of risk. Zeder Investments is currently generating about -0.13 per unit of risk. If you would invest 402,854 in African Media Entertainment on September 23, 2024 and sell it today you would earn a total of 27,046 from holding African Media Entertainment or generate 6.71% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
African Media Entertainment vs. Zeder Investments
Performance |
Timeline |
African Media Entert |
Zeder Investments |
African Media and Zeder Investments Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with African Media and Zeder Investments
The main advantage of trading using opposite African Media and Zeder Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if African Media position performs unexpectedly, Zeder Investments 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 Zeder Investments will offset losses from the drop in Zeder Investments' long position.African Media vs. Afine Investments | African Media vs. ABSA Bank Limited | African Media vs. Avi | African Media vs. Allied Electronics |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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