Correlation Between Prosus NV and Trivago NV
Can any of the company-specific risk be diversified away by investing in both Prosus NV and Trivago NV 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 Trivago NV 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 Trivago NV, you can compare the effects of market volatilities on Prosus NV and Trivago NV 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 Trivago NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosus NV and Trivago NV.
Diversification Opportunities for Prosus NV and Trivago NV
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Prosus and Trivago is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Prosus NV ADR and Trivago NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trivago NV 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 Trivago NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trivago NV has no effect on the direction of Prosus NV i.e., Prosus NV and Trivago NV go up and down completely randomly.
Pair Corralation between Prosus NV and Trivago NV
Assuming the 90 days horizon Prosus NV ADR is expected to under-perform the Trivago NV. But the pink sheet apears to be less risky and, when comparing its historical volatility, Prosus NV ADR is 2.2 times less risky than Trivago NV. The pink sheet trades about -0.14 of its potential returns per unit of risk. The Trivago NV is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 169.00 in Trivago NV on August 31, 2024 and sell it today you would earn a total of 49.00 from holding Trivago NV or generate 28.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prosus NV ADR vs. Trivago NV
Performance |
| Timeline |
| Prosus NV ADR |
| Trivago NV |
Prosus NV and Trivago NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prosus NV and Trivago NV
The main advantage of trading using opposite Prosus NV and Trivago NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosus NV position performs unexpectedly, Trivago NV 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 Trivago NV will offset losses from the drop in Trivago NV's long position.| Prosus NV vs. Ping An Insurance | Prosus NV vs. Prosus | Prosus NV vs. Meituan ADR | Prosus NV vs. Murata Manufacturing |
| Trivago NV vs. Upexi Inc | Trivago NV vs. Cheetah Mobile | Trivago NV vs. Comscore | Trivago NV vs. PropertyGuru Group |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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