Correlation Between Prosus NV and Hello
Can any of the company-specific risk be diversified away by investing in both Prosus NV and Hello 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 NV and Hello into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prosus NV ADR and Hello Group, you can compare the effects of market volatilities on Prosus NV and Hello 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 NV with a short position of Hello. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosus NV and Hello.
Diversification Opportunities for Prosus NV and Hello
Very poor diversification
The 3 months correlation between Prosus and Hello is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Prosus NV ADR and Hello Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hello Group and Prosus NV 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 NV ADR are associated (or correlated) with Hello. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hello Group has no effect on the direction of Prosus NV i.e., Prosus NV and Hello go up and down completely randomly.
Pair Corralation between Prosus NV and Hello
Assuming the 90 days horizon Prosus NV ADR is expected to generate 0.71 times more return on investment than Hello. However, Prosus NV ADR is 1.41 times less risky than Hello. It trades about 0.04 of its potential returns per unit of risk. Hello Group is currently generating about -0.02 per unit of risk. If you would invest 656.00 in Prosus NV ADR on August 28, 2024 and sell it today you would earn a total of 145.00 from holding Prosus NV ADR or generate 22.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prosus NV ADR vs. Hello Group
Performance |
| Timeline |
| Prosus NV ADR |
| Hello Group |
Prosus NV and Hello Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prosus NV and Hello
The main advantage of trading using opposite Prosus NV and Hello positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosus NV position performs unexpectedly, Hello 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 Hello will offset losses from the drop in Hello's long position.| Prosus NV vs. Ping An Insurance | Prosus NV vs. Prosus | Prosus NV vs. Meituan ADR | Prosus NV vs. Murata Manufacturing |
| Hello vs. Weibo Corp | Hello vs. Autohome | Hello vs. Tencent Music Entertainment | Hello vs. DouYu International Holdings |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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