Correlation Between Avi and Naspers
Can any of the company-specific risk be diversified away by investing in both Avi and Naspers 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 Avi and Naspers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avi and Naspers Limited, you can compare the effects of market volatilities on Avi and Naspers 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 Avi with a short position of Naspers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avi and Naspers.
Diversification Opportunities for Avi and Naspers
Very weak diversification
The 3 months correlation between Avi and Naspers is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Avi and Naspers Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naspers Limited and Avi 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 Avi are associated (or correlated) with Naspers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naspers Limited has no effect on the direction of Avi i.e., Avi and Naspers go up and down completely randomly.
Pair Corralation between Avi and Naspers
Assuming the 90 days trading horizon Avi is expected to generate 0.4 times more return on investment than Naspers. However, Avi is 2.51 times less risky than Naspers. It trades about -0.19 of its potential returns per unit of risk. Naspers Limited is currently generating about -0.26 per unit of risk. If you would invest 1,086,400 in Avi on October 24, 2024 and sell it today you would lose (43,000) from holding Avi or give up 3.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avi vs. Naspers Limited
Performance |
| Timeline |
| Avi |
| Naspers Limited |
Avi and Naspers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avi and Naspers
The main advantage of trading using opposite Avi and Naspers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avi position performs unexpectedly, Naspers 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 Naspers will offset losses from the drop in Naspers' long position.The idea behind Avi and Naspers 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.| Naspers vs. Brimstone Investment | Naspers vs. HomeChoice Investments | Naspers vs. Deneb Investments | Naspers vs. Life Healthcare |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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