Correlation Between EMedia Holdings and Universal Partners

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

Diversification Opportunities for EMedia Holdings and Universal Partners

-0.49

Correlation Coefficient

EMedia Holdings  Universal Partners

Very good diversification

The 3 months correlation between EMedia and Universal is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding eMedia Holdings Limited and Universal Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Partners 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 Universal Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Partners has no effect on the direction of EMedia Holdings i.e., EMedia Holdings and Universal Partners go up and down completely randomly.

Pair Corralation between EMedia Holdings and Universal Partners

Assuming the 90 days trading horizon eMedia Holdings Limited is expected to under-perform the Universal Partners. But the stock apears to be less risky and, when comparing its historical volatility, eMedia Holdings Limited is 1.08 times less risky than Universal Partners. The stock trades about -0.07 of its potential returns per unit of risk. The Universal Partners is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  190,000  in Universal Partners on December 23, 2024 and sell it today you would earn a total of  25,000  from holding Universal Partners or generate 13.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

eMedia Holdings Limited  vs.  Universal Partners

eMedia Holdings

Risk-Adjusted Performance

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 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.

Universal Partners

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Partners are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Universal Partners exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EMedia Holdings and Universal Partners

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

The idea behind eMedia Holdings Limited and Universal Partners 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.