Correlation Between AMS Small and Prosus NV
Can any of the company-specific risk be diversified away by investing in both AMS Small and Prosus NV 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 AMS Small and Prosus NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AMS Small Cap and Prosus NV, you can compare the effects of market volatilities on AMS Small and Prosus NV 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 AMS Small with a short position of Prosus NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMS Small and Prosus NV.
Diversification Opportunities for AMS Small and Prosus NV
Poor diversification
The 3 months correlation between AMS and Prosus is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding AMS Small Cap and Prosus NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosus NV and AMS Small 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 AMS Small Cap are associated (or correlated) with Prosus NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prosus NV has no effect on the direction of AMS Small i.e., AMS Small and Prosus NV go up and down completely randomly.
Pair Corralation between AMS Small and Prosus NV
Assuming the 90 days trading horizon AMS Small is expected to generate 7.19 times less return on investment than Prosus NV. But when comparing it to its historical volatility, AMS Small Cap is 2.05 times less risky than Prosus NV. It trades about 0.01 of its potential returns per unit of risk. Prosus NV is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,917 in Prosus NV on September 2, 2024 and sell it today you would earn a total of 938.00 from holding Prosus NV or generate 32.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
AMS Small Cap vs. Prosus NV
Performance |
| Timeline |
AMS Small and Prosus NV Volatility Contrast
Predicted Return Density |
| Returns |
AMS Small Cap
Pair trading matchups for AMS Small
Prosus NV
Pair trading matchups for Prosus NV
Pair Trading with AMS Small and Prosus NV
The main advantage of trading using opposite AMS Small and Prosus NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMS Small position performs unexpectedly, Prosus NV 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 Prosus NV will offset losses from the drop in Prosus NV's long position.| AMS Small vs. Reinet Investments SCA | AMS Small vs. Sligro Food Group | AMS Small vs. SBM Offshore NV | AMS Small vs. Universal Music Group |
| Prosus NV vs. Just Eat Takeaway | Prosus NV vs. ASML Holding NV | Prosus NV vs. Koninklijke Ahold Delhaize | Prosus NV vs. Adyen NV |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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