Correlation Between Naspers and Kuaishou Technology
Can any of the company-specific risk be diversified away by investing in both Naspers and Kuaishou Technology 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 Naspers and Kuaishou Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Naspers Ltd ADR and Kuaishou Technology, you can compare the effects of market volatilities on Naspers and Kuaishou Technology 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 Naspers with a short position of Kuaishou Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naspers and Kuaishou Technology.
Diversification Opportunities for Naspers and Kuaishou Technology
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Naspers and Kuaishou is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Naspers Ltd ADR and Kuaishou Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kuaishou Technology and Naspers 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 Naspers Ltd ADR are associated (or correlated) with Kuaishou Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kuaishou Technology has no effect on the direction of Naspers i.e., Naspers and Kuaishou Technology go up and down completely randomly.
Pair Corralation between Naspers and Kuaishou Technology
If you would invest 106.00 in Kuaishou Technology on November 4, 2024 and sell it today you would earn a total of 12.00 from holding Kuaishou Technology or generate 11.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.55% |
| Values | Daily Returns |
Naspers Ltd ADR vs. Kuaishou Technology
Performance |
| Timeline |
| Naspers Ltd ADR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Kuaishou Technology |
Naspers and Kuaishou Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Naspers and Kuaishou Technology
The main advantage of trading using opposite Naspers and Kuaishou Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naspers position performs unexpectedly, Kuaishou Technology 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 Kuaishou Technology will offset losses from the drop in Kuaishou Technology's long position.The idea behind Naspers Ltd ADR and Kuaishou Technology pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Kuaishou Technology vs. Tencent Holdings | Kuaishou Technology vs. DouYu International Holdings | Kuaishou Technology vs. Tencent Music Entertainment | Kuaishou Technology vs. Weibo Corp |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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