Correlation Between Life Healthcare and Prosus NV
Can any of the company-specific risk be diversified away by investing in both Life Healthcare 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 Life Healthcare and Prosus NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Life Healthcare and Prosus NV, you can compare the effects of market volatilities on Life Healthcare 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 Life Healthcare with a short position of Prosus NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Healthcare and Prosus NV.
Diversification Opportunities for Life Healthcare and Prosus NV
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Life and Prosus is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Life Healthcare and Prosus NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosus NV and Life Healthcare 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 Life Healthcare 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 Life Healthcare i.e., Life Healthcare and Prosus NV go up and down completely randomly.
Pair Corralation between Life Healthcare and Prosus NV
Assuming the 90 days trading horizon Life Healthcare is expected to generate 1.34 times more return on investment than Prosus NV. However, Life Healthcare is 1.34 times more volatile than Prosus NV. It trades about 0.15 of its potential returns per unit of risk. Prosus NV is currently generating about -0.22 per unit of risk. If you would invest 165,900 in Life Healthcare on August 30, 2024 and sell it today you would earn a total of 8,300 from holding Life Healthcare or generate 5.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Life Healthcare vs. Prosus NV
Performance |
| Timeline |
| Life Healthcare |
| Prosus NV |
Life Healthcare and Prosus NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Life Healthcare and Prosus NV
The main advantage of trading using opposite Life Healthcare and Prosus NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Life Healthcare 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.| Life Healthcare vs. Hosken Consolidated Investments | Life Healthcare vs. Reinet Investments SCA | Life Healthcare vs. African Media Entertainment | Life Healthcare vs. Brimstone Investment |
| Prosus NV vs. Sasol Ltd Bee | Prosus NV vs. Centaur Bci Balanced | Prosus NV vs. Sabvest Capital | Prosus NV vs. Growthpoint Properties |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |