Correlation Between Prosus and IAC
Can any of the company-specific risk be diversified away by investing in both Prosus and IAC 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 Prosus and IAC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prosus and IAC Inc, you can compare the effects of market volatilities on Prosus and IAC 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 Prosus with a short position of IAC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosus and IAC.
Diversification Opportunities for Prosus and IAC
Average diversification
The 3 months correlation between Prosus and IAC is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Prosus and IAC Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IAC Inc and Prosus 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 Prosus are associated (or correlated) with IAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IAC Inc has no effect on the direction of Prosus i.e., Prosus and IAC go up and down completely randomly.
Pair Corralation between Prosus and IAC
Assuming the 90 days horizon Prosus is expected to under-perform the IAC. But the pink sheet apears to be less risky and, when comparing its historical volatility, Prosus is 2.72 times less risky than IAC. The pink sheet trades about -0.33 of its potential returns per unit of risk. The IAC Inc is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 5,100 in IAC Inc on August 31, 2024 and sell it today you would lose (367.00) from holding IAC Inc or give up 7.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prosus vs. IAC Inc
Performance |
| Timeline |
| Prosus |
| IAC Inc |
Prosus and IAC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prosus and IAC
The main advantage of trading using opposite Prosus and IAC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosus position performs unexpectedly, IAC 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 IAC will offset losses from the drop in IAC's long position.| 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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