Correlation Between Kuaishou Technology and Prosus
Can any of the company-specific risk be diversified away by investing in both Kuaishou Technology 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 Kuaishou Technology and Prosus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kuaishou Technology and Prosus, you can compare the effects of market volatilities on Kuaishou Technology 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 Kuaishou Technology with a short position of Prosus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kuaishou Technology and Prosus.
Diversification Opportunities for Kuaishou Technology and Prosus
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kuaishou and Prosus is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Kuaishou Technology and Prosus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosus and Kuaishou Technology 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 Kuaishou 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 Kuaishou Technology i.e., Kuaishou Technology and Prosus go up and down completely randomly.
Pair Corralation between Kuaishou Technology and Prosus
Assuming the 90 days horizon Kuaishou Technology is expected to generate 3.45 times less return on investment than Prosus. But when comparing it to its historical volatility, Kuaishou Technology is 2.42 times less risky than Prosus. It trades about 0.01 of its potential returns per unit of risk. Prosus is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 7,063 in Prosus on August 28, 2024 and sell it today you would lose (3,110) from holding Prosus or give up 44.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kuaishou Technology vs. Prosus
Performance |
| Timeline |
| Kuaishou Technology |
| Prosus |
Kuaishou Technology and Prosus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kuaishou Technology and Prosus
The main advantage of trading using opposite Kuaishou Technology and Prosus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kuaishou Technology 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.| Kuaishou Technology vs. Tencent Holdings | Kuaishou Technology vs. Trivago NV | Kuaishou Technology vs. YY Inc Class | Kuaishou Technology vs. DouYu International Holdings |
| 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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