Correlation Between Prosus and Naspers
Can any of the company-specific risk be diversified away by investing in both Prosus and Naspers 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 Naspers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prosus and Naspers Limited, you can compare the effects of market volatilities on Prosus and Naspers 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 Naspers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosus and Naspers.
Diversification Opportunities for Prosus and Naspers
Very poor diversification
The 3 months correlation between Prosus and Naspers is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Prosus and Naspers Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naspers Limited 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 Naspers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naspers Limited has no effect on the direction of Prosus i.e., Prosus and Naspers go up and down completely randomly.
Pair Corralation between Prosus and Naspers
Assuming the 90 days horizon Prosus is expected to generate 0.9 times more return on investment than Naspers. However, Prosus is 1.11 times less risky than Naspers. It trades about -0.08 of its potential returns per unit of risk. Naspers Limited is currently generating about -0.08 per unit of risk. If you would invest 4,239 in Prosus on October 26, 2024 and sell it today you would lose (515.00) from holding Prosus or give up 12.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.33% |
| Values | Daily Returns |
Prosus vs. Naspers Limited
Performance |
| Timeline |
| Prosus |
| Naspers Limited |
Prosus and Naspers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prosus and Naspers
The main advantage of trading using opposite Prosus and Naspers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosus position performs unexpectedly, Naspers 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 Naspers will offset losses from the drop in Naspers' 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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