Correlation Between IMedia Brands and Bushveld Minerals

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Can any of the company-specific risk be diversified away by investing in both IMedia Brands and Bushveld Minerals 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 IMedia Brands and Bushveld Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IMedia Brands and Bushveld Minerals Limited, you can compare the effects of market volatilities on IMedia Brands and Bushveld Minerals 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 IMedia Brands with a short position of Bushveld Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of IMedia Brands and Bushveld Minerals.

Diversification Opportunities for IMedia Brands and Bushveld Minerals

-0.03
  Correlation Coefficient

Good diversification

The 3 months correlation between IMedia and Bushveld is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding IMedia Brands and Bushveld Minerals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bushveld Minerals and IMedia Brands 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 IMedia Brands are associated (or correlated) with Bushveld Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bushveld Minerals has no effect on the direction of IMedia Brands i.e., IMedia Brands and Bushveld Minerals go up and down completely randomly.

Pair Corralation between IMedia Brands and Bushveld Minerals

Given the investment horizon of 90 days IMedia Brands is expected to generate 0.19 times more return on investment than Bushveld Minerals. However, IMedia Brands is 5.32 times less risky than Bushveld Minerals. It trades about 0.21 of its potential returns per unit of risk. Bushveld Minerals Limited is currently generating about 0.03 per unit of risk. If you would invest  48.00  in IMedia Brands on September 5, 2022 and sell it today you would earn a total of  10.00  from holding IMedia Brands or generate 20.83% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

IMedia Brands  vs.  Bushveld Minerals Limited

 Performance (%) 
       Timeline  
IMedia Brands 
IMedia Performance
0 of 100
Over the last 90 days IMedia Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's fundamental drivers remain nearly stable which may send shares a bit higher in January 2023. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

IMedia Price Channel

Bushveld Minerals 
Bushveld Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Bushveld Minerals Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Bushveld Minerals exhibited solid returns over the last few months and may actually be approaching a breakup point.

Bushveld Price Channel

IMedia Brands and Bushveld Minerals Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with IMedia Brands and Bushveld Minerals

The main advantage of trading using opposite IMedia Brands and Bushveld Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IMedia Brands position performs unexpectedly, Bushveld Minerals 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 Bushveld Minerals will offset losses from the drop in Bushveld Minerals' long position.
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The idea behind IMedia Brands and Bushveld Minerals 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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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.

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