Correlation Between Lewis Group and E Media

Can any of the company-specific risk be diversified away by investing in both Lewis Group and E Media 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 Lewis Group and E Media into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Lewis Group and E Media

0.02

Correlation Coefficient

Lewis Group  E Media

Significant diversification

The 3 months correlation between Lewis and EMH is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Lewis Group Limited and E Media Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E Media Holdings and Lewis Group 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 Lewis Group Limited are associated (or correlated) with E Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E Media Holdings has no effect on the direction of Lewis Group i.e., Lewis Group and E Media go up and down completely randomly.

Pair Corralation between Lewis Group and E Media

Assuming the 90 days trading horizon Lewis Group Limited is expected to under-perform the E Media. But the stock apears to be less risky and, when comparing its historical volatility, Lewis Group Limited is 2.0 times less risky than E Media. The stock trades about -0.14 of its potential returns per unit of risk. The E Media Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  32,981  in E Media Holdings on October 9, 2024 and sell it today you would earn a total of  519.00  from holding E Media Holdings or generate 1.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Lewis Group Limited  vs.  E Media Holdings

Lewis Group Limited

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lewis Group Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Lewis Group exhibited solid returns over the last few months and may actually be approaching a breakup point.

E Media Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in E Media Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, E Media is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Lewis Group and E Media

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

The idea behind Lewis Group Limited and E Media Holdings 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.