Correlation Between EMedia Holdings and Afine Investments

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

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

Diversification Opportunities for EMedia Holdings and Afine Investments

-0.39

Correlation Coefficient

EMedia Holdings  Afine Investments

Very good diversification

The 3 months correlation between EMedia and Afine is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding eMedia Holdings Limited and Afine Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afine Investments and EMedia 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 eMedia Holdings Limited are associated (or correlated) with Afine Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Afine Investments has no effect on the direction of EMedia Holdings i.e., EMedia Holdings and Afine Investments go up and down completely randomly.

Pair Corralation between EMedia Holdings and Afine Investments

Assuming the 90 days trading horizon eMedia Holdings Limited is expected to under-perform the Afine Investments. But the stock apears to be less risky and, when comparing its historical volatility, eMedia Holdings Limited is 1.4 times less risky than Afine Investments. The stock trades about -0.03 of its potential returns per unit of risk. The Afine Investments is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  40,000  in Afine Investments on September 3, 2024 and sell it today you would earn a total of  5,000  from holding Afine Investments or generate 12.5% return on investment over 90 days.

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

eMedia Holdings Limited  vs.  Afine Investments

eMedia Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in eMedia Holdings Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, EMedia Holdings is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Afine Investments

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with EMedia Holdings and Afine Investments

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

The idea behind eMedia Holdings Limited and Afine Investments 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.