Correlation Between Prosus NV and MTN
Can any of the company-specific risk be diversified away by investing in both Prosus NV and MTN 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 MTN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prosus NV and MTN Group, you can compare the effects of market volatilities on Prosus NV and MTN 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 MTN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosus NV and MTN.
Diversification Opportunities for Prosus NV and MTN
Excellent diversification
The 3 months correlation between Prosus and MTN is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Prosus NV and MTN Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MTN 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 are associated (or correlated) with MTN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MTN Group has no effect on the direction of Prosus NV i.e., Prosus NV and MTN go up and down completely randomly.
Pair Corralation between Prosus NV and MTN
Assuming the 90 days trading horizon Prosus NV is expected to generate 0.83 times more return on investment than MTN. However, Prosus NV is 1.2 times less risky than MTN. It trades about -0.22 of its potential returns per unit of risk. MTN Group is currently generating about -0.3 per unit of risk. If you would invest 7,606,490 in Prosus NV on August 27, 2024 and sell it today you would lose (396,490) from holding Prosus NV or give up 5.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prosus NV vs. MTN Group
Performance |
| Timeline |
| Prosus NV |
| MTN Group |
Prosus NV and MTN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prosus NV and MTN
The main advantage of trading using opposite Prosus NV and MTN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosus NV position performs unexpectedly, MTN 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 MTN will offset losses from the drop in MTN's long position.| Prosus NV vs. Centaur Bci Balanced | Prosus NV vs. Sabvest Capital | Prosus NV vs. Growthpoint Properties | Prosus NV vs. Bowler Metcalf |
| MTN vs. CA Sales Holdings | MTN vs. Harmony Gold Mining | MTN vs. Trematon Capital Investments | MTN vs. Brimstone Investment |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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