Correlation Between Prosus NV and Basic Fit
Can any of the company-specific risk be diversified away by investing in both Prosus NV and Basic Fit 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 Basic Fit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prosus NV and Basic Fit NV, you can compare the effects of market volatilities on Prosus NV and Basic Fit 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 Basic Fit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosus NV and Basic Fit.
Diversification Opportunities for Prosus NV and Basic Fit
Very good diversification
The 3 months correlation between Prosus and Basic is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Prosus NV and Basic Fit NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Basic Fit 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 are associated (or correlated) with Basic Fit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Basic Fit NV has no effect on the direction of Prosus NV i.e., Prosus NV and Basic Fit go up and down completely randomly.
Pair Corralation between Prosus NV and Basic Fit
Assuming the 90 days trading horizon Prosus NV is expected to under-perform the Basic Fit. But the stock apears to be less risky and, when comparing its historical volatility, Prosus NV is 1.18 times less risky than Basic Fit. The stock trades about -0.07 of its potential returns per unit of risk. The Basic Fit NV is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,330 in Basic Fit NV on November 4, 2024 and sell it today you would earn a total of 118.00 from holding Basic Fit NV or generate 5.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prosus NV vs. Basic Fit NV
Performance |
| Timeline |
| Prosus NV |
| Basic Fit NV |
Prosus NV and Basic Fit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prosus NV and Basic Fit
The main advantage of trading using opposite Prosus NV and Basic Fit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosus NV position performs unexpectedly, Basic Fit 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 Basic Fit will offset losses from the drop in Basic Fit's long position.| Prosus NV vs. Just Eat Takeaway | Prosus NV vs. ASML Holding NV | Prosus NV vs. Koninklijke Ahold Delhaize | Prosus NV vs. Adyen NV |
| Basic Fit vs. Alfen Beheer BV | Basic Fit vs. Just Eat Takeaway | Basic Fit vs. Kinepolis Group NV | Basic Fit vs. Galapagos NV |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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