Correlation Between Prosus NV and XLMedia PLC
Can any of the company-specific risk be diversified away by investing in both Prosus NV and XLMedia PLC 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 Prosus NV and XLMedia PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prosus NV and XLMedia PLC, you can compare the effects of market volatilities on Prosus NV and XLMedia PLC 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 Prosus NV with a short position of XLMedia PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosus NV and XLMedia PLC.
Diversification Opportunities for Prosus NV and XLMedia PLC
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Prosus and XLMedia is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Prosus NV and XLMedia PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XLMedia PLC and Prosus NV 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 Prosus NV are associated (or correlated) with XLMedia PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XLMedia PLC has no effect on the direction of Prosus NV i.e., Prosus NV and XLMedia PLC go up and down completely randomly.
Pair Corralation between Prosus NV and XLMedia PLC
Assuming the 90 days horizon Prosus NV is expected to under-perform the XLMedia PLC. But the stock apears to be less risky and, when comparing its historical volatility, Prosus NV is 2.0 times less risky than XLMedia PLC. The stock trades about -0.03 of its potential returns per unit of risk. The XLMedia PLC is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 9.90 in XLMedia PLC on November 3, 2024 and sell it today you would earn a total of 2.10 from holding XLMedia PLC or generate 21.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prosus NV vs. XLMedia PLC
Performance |
| Timeline |
| Prosus NV |
| XLMedia PLC |
Prosus NV and XLMedia PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prosus NV and XLMedia PLC
The main advantage of trading using opposite Prosus NV and XLMedia PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosus NV position performs unexpectedly, XLMedia PLC 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 XLMedia PLC will offset losses from the drop in XLMedia PLC's long position.| Prosus NV vs. Treasury Wine Estates | Prosus NV vs. Granite Construction | Prosus NV vs. North American Construction | Prosus NV vs. Jacquet Metal Service |
| XLMedia PLC vs. TROPHY GAMES DEV | XLMedia PLC vs. Scientific Games | XLMedia PLC vs. DETALION GAMES SA | XLMedia PLC vs. FIRST SHIP LEASE |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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