Correlation Between Rex Trueform and African Media
Can any of the company-specific risk be diversified away by investing in both Rex Trueform and African 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 Rex Trueform and African Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rex Trueform Group and African Media Entertainment, you can compare the effects of market volatilities on Rex Trueform and African 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 Rex Trueform with a short position of African Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rex Trueform and African Media.
Diversification Opportunities for Rex Trueform and African Media
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Rex and African is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Rex Trueform Group and African Media Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on African Media Entert and Rex Trueform 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 Rex Trueform Group are associated (or correlated) with African Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of African Media Entert has no effect on the direction of Rex Trueform i.e., Rex Trueform and African Media go up and down completely randomly.
Pair Corralation between Rex Trueform and African Media
Assuming the 90 days trading horizon Rex Trueform Group is expected to under-perform the African Media. But the stock apears to be less risky and, when comparing its historical volatility, Rex Trueform Group is 89.22 times less risky than African Media. The stock trades about -0.07 of its potential returns per unit of risk. The African Media Entertainment is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 402,854 in African Media Entertainment on September 23, 2024 and sell it today you would earn a total of 27,046 from holding African Media Entertainment or generate 6.71% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 97.67% |
Values | Daily Returns |
Rex Trueform Group vs. African Media Entertainment
Performance |
Timeline |
Rex Trueform Group |
African Media Entert |
Rex Trueform and African Media Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Rex Trueform and African Media
The main advantage of trading using opposite Rex Trueform and African Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rex Trueform position performs unexpectedly, African 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 African Media will offset losses from the drop in African Media's long position.Rex Trueform vs. Mr Price Group | Rex Trueform vs. Truworths International | Rex Trueform vs. Rex Trueform Group | Rex Trueform vs. Brait SE |
African Media vs. Afine Investments | African Media vs. ABSA Bank Limited | African Media vs. Avi | African Media vs. Allied Electronics |
Check out your portfolio center.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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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