Correlation Between EMedia Holdings and Growthpoint Properties

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

By analyzing existing cross correlation between eMedia Holdings Limited and Growthpoint Properties, you can compare the effects of market volatilities on EMedia Holdings and Growthpoint Properties 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 EMedia Holdings with a short position of Growthpoint Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMedia Holdings and Growthpoint Properties.

Diversification Opportunities for EMedia Holdings and Growthpoint Properties

-0.24

Correlation Coefficient

EMedia Holdings  Growthpoint Properties

Very good diversification

The 3 months correlation between EMedia and Growthpoint is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding eMedia Holdings Limited and Growthpoint Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growthpoint Properties and EMedia Holdings 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 eMedia Holdings Limited are associated (or correlated) with Growthpoint Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growthpoint Properties has no effect on the direction of EMedia Holdings i.e., EMedia Holdings and Growthpoint Properties go up and down completely randomly.

Pair Corralation between EMedia Holdings and Growthpoint Properties

Assuming the 90 days trading horizon eMedia Holdings Limited is expected to generate 2.35 times more return on investment than Growthpoint Properties. However, EMedia Holdings is 2.35 times more volatile than Growthpoint Properties. It trades about -0.02 of its potential returns per unit of risk. Growthpoint Properties is currently generating about -0.05 per unit of risk. If you would invest  33,000  in eMedia Holdings Limited on October 22, 2024 and sell it today you would lose (1,900) from holding eMedia Holdings Limited or give up 5.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

eMedia Holdings Limited  vs.  Growthpoint Properties

eMedia Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

Growthpoint Properties

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with EMedia Holdings and Growthpoint Properties

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

The idea behind eMedia Holdings Limited and Growthpoint Properties 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.