Correlation Between Hello and Prosus
Can any of the company-specific risk be diversified away by investing in both Hello 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 Hello and Prosus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hello Group and Prosus, you can compare the effects of market volatilities on Hello 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 Hello with a short position of Prosus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hello and Prosus.
Diversification Opportunities for Hello and Prosus
Very poor diversification
The 3 months correlation between Hello and Prosus is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Hello Group and Prosus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosus and Hello 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 Hello Group 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 Hello i.e., Hello and Prosus go up and down completely randomly.
Pair Corralation between Hello and Prosus
Given the investment horizon of 90 days Hello Group is expected to under-perform the Prosus. In addition to that, Hello is 1.52 times more volatile than Prosus. It trades about -0.18 of its total potential returns per unit of risk. Prosus is currently generating about -0.22 per unit of volatility. If you would invest 4,239 in Prosus on August 28, 2024 and sell it today you would lose (286.00) from holding Prosus or give up 6.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hello Group vs. Prosus
Performance |
| Timeline |
| Hello Group |
| Prosus |
Hello and Prosus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hello and Prosus
The main advantage of trading using opposite Hello and Prosus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hello 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.| Hello vs. Weibo Corp | Hello vs. Autohome | Hello vs. Tencent Music Entertainment | Hello 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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