Correlation Between AfricaRhodium ETF and EMedia Holdings

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

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

Diversification Opportunities for AfricaRhodium ETF and EMedia Holdings

-0.11

Correlation Coefficient

AfricaRhodium ETF  EMedia Holdings

Good diversification

The 3 months correlation between AfricaRhodium and EMedia is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding AfricaRhodium ETF and eMedia Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eMedia Holdings and AfricaRhodium ETF 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 AfricaRhodium ETF are associated (or correlated) with EMedia Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eMedia Holdings has no effect on the direction of AfricaRhodium ETF i.e., AfricaRhodium ETF and EMedia Holdings go up and down completely randomly.

Pair Corralation between AfricaRhodium ETF and EMedia Holdings

Assuming the 90 days trading horizon AfricaRhodium ETF is expected to generate 1.0 times more return on investment than EMedia Holdings. However, AfricaRhodium ETF is 1.0 times less risky than EMedia Holdings. It trades about 0.16 of its potential returns per unit of risk. eMedia Holdings Limited is currently generating about -0.07 per unit of risk. If you would invest  7,764,100  in AfricaRhodium ETF on December 28, 2024 and sell it today you would earn a total of  2,155,800  from holding AfricaRhodium ETF or generate 27.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

AfricaRhodium ETF  vs.  eMedia Holdings Limited

AfricaRhodium ETF

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AfricaRhodium ETF are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, AfricaRhodium ETF sustained solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with AfricaRhodium ETF and EMedia Holdings

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

The idea behind AfricaRhodium ETF and eMedia Holdings Limited 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.