Correlation Between Prosus and TrueCar
Can any of the company-specific risk be diversified away by investing in both Prosus and TrueCar 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 TrueCar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prosus and TrueCar, you can compare the effects of market volatilities on Prosus and TrueCar 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 TrueCar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosus and TrueCar.
Diversification Opportunities for Prosus and TrueCar
Very weak diversification
The 3 months correlation between Prosus and TrueCar is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Prosus and TrueCar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TrueCar 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 TrueCar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TrueCar has no effect on the direction of Prosus i.e., Prosus and TrueCar go up and down completely randomly.
Pair Corralation between Prosus and TrueCar
Assuming the 90 days horizon Prosus is expected to generate 0.98 times more return on investment than TrueCar. However, Prosus is 1.02 times less risky than TrueCar. It trades about -0.06 of its potential returns per unit of risk. TrueCar is currently generating about -0.13 per unit of risk. If you would invest 3,953 in Prosus on October 25, 2024 and sell it today you would lose (303.00) from holding Prosus or give up 7.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prosus vs. TrueCar
Performance |
| Timeline |
| Prosus |
| TrueCar |
Prosus and TrueCar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prosus and TrueCar
The main advantage of trading using opposite Prosus and TrueCar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosus position performs unexpectedly, TrueCar 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 TrueCar will offset losses from the drop in TrueCar'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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |