Correlation Between Bidvest and EMedia Holdings

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

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

Diversification Opportunities for Bidvest and EMedia Holdings

0.32

Correlation Coefficient

Bidvest  EMedia Holdings

Weak diversification

The 3 months correlation between Bidvest and EMedia is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Bidvest Group and eMedia Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eMedia Holdings and Bidvest 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 Bidvest Group 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 Bidvest i.e., Bidvest and EMedia Holdings go up and down completely randomly.

Pair Corralation between Bidvest and EMedia Holdings

Assuming the 90 days trading horizon Bidvest Group is expected to under-perform the EMedia Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Bidvest Group is 1.5 times less risky than EMedia Holdings. The stock trades about -0.13 of its potential returns per unit of risk. The eMedia Holdings Limited is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  33,500  in eMedia Holdings Limited on September 5, 2024 and sell it today you would lose (500.00) from holding eMedia Holdings Limited or give up 1.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

Bidvest Group  vs.  eMedia Holdings Limited

Bidvest Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bidvest Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Bidvest is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

eMedia Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in eMedia Holdings Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, EMedia Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Bidvest and EMedia Holdings

The main advantage of trading using opposite Bidvest and EMedia Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bidvest 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 Bidvest Group 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.