Correlation Between Golden Grail and Prosus
Can any of the company-specific risk be diversified away by investing in both Golden Grail and Prosus 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 Golden Grail and Prosus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Golden Grail Technology and Prosus, you can compare the effects of market volatilities on Golden Grail and Prosus 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 Golden Grail with a short position of Prosus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Grail and Prosus.
Diversification Opportunities for Golden Grail and Prosus
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Golden and Prosus is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Golden Grail Technology and Prosus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosus and Golden Grail 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 Golden Grail Technology are associated (or correlated) with Prosus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prosus has no effect on the direction of Golden Grail i.e., Golden Grail and Prosus go up and down completely randomly.
Pair Corralation between Golden Grail and Prosus
Given the investment horizon of 90 days Golden Grail Technology is expected to generate 4.47 times more return on investment than Prosus. However, Golden Grail is 4.47 times more volatile than Prosus. It trades about -0.01 of its potential returns per unit of risk. Prosus is currently generating about -0.08 per unit of risk. If you would invest 3.70 in Golden Grail Technology on November 4, 2024 and sell it today you would lose (0.60) from holding Golden Grail Technology or give up 16.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Golden Grail Technology vs. Prosus
Performance |
| Timeline |
| Golden Grail Technology |
| Prosus |
Golden Grail and Prosus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golden Grail and Prosus
The main advantage of trading using opposite Golden Grail and Prosus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Grail position performs unexpectedly, Prosus 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 will offset losses from the drop in Prosus' long position.| Golden Grail vs. Tencent Holdings | Golden Grail vs. Autohome | Golden Grail vs. Arena Group Holdings | Golden Grail vs. Asset Entities Class |
| Prosus vs. Tencent Holdings | Prosus vs. Autohome | Prosus vs. Arena Group Holdings | Prosus vs. Golden Grail Technology |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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