Correlation Between International Business and Prosus
Can any of the company-specific risk be diversified away by investing in both International Business 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 International Business and Prosus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Business Machines and Prosus, you can compare the effects of market volatilities on International Business 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 International Business with a short position of Prosus. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and Prosus.
Diversification Opportunities for International Business and Prosus
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between International and Prosus is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and Prosus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosus and International Business 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 International Business Machines 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 International Business i.e., International Business and Prosus go up and down completely randomly.
Pair Corralation between International Business and Prosus
Considering the 90-day investment horizon International Business Machines is expected to generate 0.75 times more return on investment than Prosus. However, International Business Machines is 1.33 times less risky than Prosus. It trades about 0.14 of its potential returns per unit of risk. Prosus is currently generating about 0.08 per unit of risk. If you would invest 20,055 in International Business Machines on August 30, 2024 and sell it today you would earn a total of 2,637 from holding International Business Machines or generate 13.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Business Machine vs. Prosus
Performance |
| Timeline |
| International Business |
| Prosus |
International Business and Prosus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Business and Prosus
The main advantage of trading using opposite International Business and Prosus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Business 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.| International Business vs. RLJ Lodging Trust | International Business vs. Aquagold International | International Business vs. Stepstone Group | International Business vs. Morningstar Unconstrained Allocation |
| 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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