Correlation Between Prosus and Kuaishou Technology
Can any of the company-specific risk be diversified away by investing in both Prosus 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 Prosus and Kuaishou Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prosus and Kuaishou Technology, you can compare the effects of market volatilities on Prosus 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 Prosus with a short position of Kuaishou Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosus and Kuaishou Technology.
Diversification Opportunities for Prosus and Kuaishou Technology
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Prosus and Kuaishou is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Prosus and Kuaishou Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kuaishou Technology 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 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 Prosus i.e., Prosus and Kuaishou Technology go up and down completely randomly.
Pair Corralation between Prosus and Kuaishou Technology
Assuming the 90 days horizon Prosus is expected to under-perform the Kuaishou Technology. But the pink sheet apears to be less risky and, when comparing its historical volatility, Prosus is 4.05 times less risky than Kuaishou Technology. The pink sheet trades about -0.22 of its potential returns per unit of risk. The Kuaishou Technology is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 130.00 in Kuaishou Technology on August 28, 2024 and sell it today you would lose (7.00) from holding Kuaishou Technology or give up 5.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prosus vs. Kuaishou Technology
Performance |
| Timeline |
| Prosus |
| Kuaishou Technology |
Prosus and Kuaishou Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prosus and Kuaishou Technology
The main advantage of trading using opposite Prosus and Kuaishou Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosus 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.| Prosus vs. Tencent Holdings | Prosus vs. Autohome | Prosus vs. Arena Group Holdings | Prosus vs. Golden Grail Technology |
| Kuaishou Technology vs. Trivago NV | Kuaishou Technology vs. YY Inc Class | Kuaishou Technology vs. DouYu International Holdings | Kuaishou Technology vs. Tencent Music Entertainment |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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