Correlation Between Hello and Prosus NV
Can any of the company-specific risk be diversified away by investing in both Hello 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 Hello and Prosus NV 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 NV ADR, you can compare the effects of market volatilities on Hello 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 Hello with a short position of Prosus NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hello and Prosus NV.
Diversification Opportunities for Hello and Prosus NV
Modest diversification
The 3 months correlation between Hello and Prosus is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Hello Group and Prosus NV ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosus NV ADR 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 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 ADR has no effect on the direction of Hello i.e., Hello and Prosus NV go up and down completely randomly.
Pair Corralation between Hello and Prosus NV
Given the investment horizon of 90 days Hello Group is expected to generate 1.08 times more return on investment than Prosus NV. However, Hello is 1.08 times more volatile than Prosus NV ADR. It trades about -0.04 of its potential returns per unit of risk. Prosus NV ADR is currently generating about -0.25 per unit of risk. If you would invest 739.00 in Hello Group on October 25, 2024 and sell it today you would lose (18.00) from holding Hello Group or give up 2.44% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Hello Group vs. Prosus NV ADR
Performance |
Timeline |
Hello Group |
Prosus NV ADR |
Hello and Prosus NV Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hello and Prosus NV
The main advantage of trading using opposite Hello and Prosus NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hello 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.Hello vs. Weibo Corp | Hello vs. Autohome | Hello vs. Tencent Music Entertainment | Hello vs. DouYu International Holdings |
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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