Correlation Between Investec Limited and Prosus NV
Can any of the company-specific risk be diversified away by investing in both Investec Limited 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 Investec Limited and Prosus NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investec Limited NON and Prosus NV, you can compare the effects of market volatilities on Investec Limited 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 Investec Limited with a short position of Prosus NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investec Limited and Prosus NV.
Diversification Opportunities for Investec Limited and Prosus NV
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Investec and Prosus is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Investec Limited NON and Prosus NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosus NV and Investec Limited 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 Investec Limited NON 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 Investec Limited i.e., Investec Limited and Prosus NV go up and down completely randomly.
Pair Corralation between Investec Limited and Prosus NV
Assuming the 90 days trading horizon Investec Limited is expected to generate 12.58 times less return on investment than Prosus NV. But when comparing it to its historical volatility, Investec Limited NON is 1.69 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 5,156,546 in Prosus NV on August 28, 2024 and sell it today you would earn a total of 2,053,454 from holding Prosus NV or generate 39.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Investec Limited NON vs. Prosus NV
Performance |
| Timeline |
| Investec Limited NON |
| Prosus NV |
Investec Limited and Prosus NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investec Limited and Prosus NV
The main advantage of trading using opposite Investec Limited and Prosus NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investec Limited 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.| Investec Limited vs. Sasol Ltd Bee | Investec Limited vs. Centaur Bci Balanced | Investec Limited vs. Sabvest Capital | Investec Limited vs. Growthpoint Properties |
| Prosus NV vs. Centaur Bci Balanced | Prosus NV vs. Sabvest Capital | Prosus NV vs. Growthpoint Properties | Prosus NV vs. Bowler Metcalf |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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