Correlation Between EMedia Holdings and S A P

Can any of the company-specific risk be diversified away by investing in both EMedia Holdings and S A P 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 S A P 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 Sappi, you can compare the effects of market volatilities on EMedia Holdings and S A P 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 S A P. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMedia Holdings and S A P.

Diversification Opportunities for EMedia Holdings and S A P

-0.24

Correlation Coefficient

EMedia Holdings  S A P

Very good diversification

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

Pair Corralation between EMedia Holdings and S A P

Assuming the 90 days trading horizon eMedia Holdings Limited is expected to generate 30.1 times more return on investment than S A P. However, EMedia Holdings is 30.1 times more volatile than Sappi. It trades about 0.06 of its potential returns per unit of risk. Sappi is currently generating about 0.01 per unit of risk. If you would invest  378.00  in eMedia Holdings Limited on October 21, 2024 and sell it today you would earn a total of  30,722  from holding eMedia Holdings Limited or generate 8127.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

eMedia Holdings Limited  vs.  Sappi

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.

Sappi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sappi has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, S A P 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 S A P

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

The idea behind eMedia Holdings Limited and Sappi 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.