Correlation Between Daifuku and Prosus NV
Can any of the company-specific risk be diversified away by investing in both Daifuku 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 Daifuku and Prosus NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daifuku Co and Prosus NV ADR, you can compare the effects of market volatilities on Daifuku 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 Daifuku with a short position of Prosus NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daifuku and Prosus NV.
Diversification Opportunities for Daifuku and Prosus NV
Very good diversification
The 3 months correlation between Daifuku and Prosus is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Daifuku Co and Prosus NV ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosus NV ADR and Daifuku 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 Daifuku Co 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 ADR has no effect on the direction of Daifuku i.e., Daifuku and Prosus NV go up and down completely randomly.
Pair Corralation between Daifuku and Prosus NV
Assuming the 90 days horizon Daifuku Co is expected to generate 35.58 times more return on investment than Prosus NV. However, Daifuku is 35.58 times more volatile than Prosus NV ADR. It trades about 0.07 of its potential returns per unit of risk. Prosus NV ADR is currently generating about 0.04 per unit of risk. If you would invest 5,236 in Daifuku Co on August 24, 2024 and sell it today you would lose (3,612) from holding Daifuku Co or give up 68.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 40.73% |
| Values | Daily Returns |
Daifuku Co vs. Prosus NV ADR
Performance |
| Timeline |
| Daifuku |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Prosus NV ADR |
Daifuku and Prosus NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daifuku and Prosus NV
The main advantage of trading using opposite Daifuku and Prosus NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daifuku 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.The idea behind Daifuku Co and Prosus NV ADR 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.| Prosus NV vs. Tencent Holdings | Prosus NV vs. Trivago NV | Prosus NV vs. YY Inc Class | Prosus NV vs. DouYu International Holdings |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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