Correlation Between Pepkor Holdings and E Media

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

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

Diversification Opportunities for Pepkor Holdings and E Media

0.13

Correlation Coefficient

Pepkor Holdings  E Media

Average diversification

The 3 months correlation between Pepkor and EMH is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Pepkor Holdings 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 Pepkor 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 Pepkor Holdings 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 Pepkor Holdings i.e., Pepkor Holdings and E Media go up and down completely randomly.

Pair Corralation between Pepkor Holdings and E Media

Assuming the 90 days trading horizon Pepkor Holdings is expected to generate 1.03 times less return on investment than E Media. But when comparing it to its historical volatility, Pepkor Holdings is 1.75 times less risky than E Media. It trades about 0.19 of its potential returns per unit of risk. E Media Holdings is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  34,300  in E Media Holdings on October 5, 2024 and sell it today you would earn a total of  1,200  from holding E Media Holdings or generate 3.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Pepkor Holdings  vs.  E Media Holdings

Pepkor Holdings

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pepkor Holdings are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Pepkor Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

E Media Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in E Media Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, E Media may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Pepkor Holdings and E Media

The main advantage of trading using opposite Pepkor Holdings and E Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pepkor Holdings 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 Pepkor Holdings 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..