Correlation Between Prosus NV and Eastern Platinum
Can any of the company-specific risk be diversified away by investing in both Prosus NV and Eastern Platinum 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 Eastern Platinum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prosus NV and Eastern Platinum Limited, you can compare the effects of market volatilities on Prosus NV and Eastern Platinum 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 Eastern Platinum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosus NV and Eastern Platinum.
Diversification Opportunities for Prosus NV and Eastern Platinum
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Prosus and Eastern is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Prosus NV and Eastern Platinum Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern Platinum 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 Eastern Platinum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern Platinum has no effect on the direction of Prosus NV i.e., Prosus NV and Eastern Platinum go up and down completely randomly.
Pair Corralation between Prosus NV and Eastern Platinum
Assuming the 90 days trading horizon Prosus NV is expected to generate 0.67 times more return on investment than Eastern Platinum. However, Prosus NV is 1.5 times less risky than Eastern Platinum. It trades about 0.03 of its potential returns per unit of risk. Eastern Platinum Limited is currently generating about -0.03 per unit of risk. If you would invest 6,897,584 in Prosus NV on September 2, 2024 and sell it today you would earn a total of 362,416 from holding Prosus NV or generate 5.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Prosus NV vs. Eastern Platinum Limited
Performance |
| Timeline |
| Prosus NV |
| Eastern Platinum |
Prosus NV and Eastern Platinum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prosus NV and Eastern Platinum
The main advantage of trading using opposite Prosus NV and Eastern Platinum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosus NV position performs unexpectedly, Eastern Platinum 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 Eastern Platinum will offset losses from the drop in Eastern Platinum's long position.| Prosus NV vs. ABSA Bank Limited | Prosus NV vs. Harmony Gold Mining | Prosus NV vs. City Lodge Hotels | Prosus NV vs. RCL Foods |
| Eastern Platinum vs. Prosus NV | Eastern Platinum vs. British American Tobacco | Eastern Platinum vs. Glencore PLC | Eastern Platinum vs. Anglo American PLC |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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