Correlation Between Prosus NV and Rex Trueform
Can any of the company-specific risk be diversified away by investing in both Prosus NV and Rex Trueform 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 Rex Trueform into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prosus NV and Rex Trueform Group, you can compare the effects of market volatilities on Prosus NV and Rex Trueform 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 Rex Trueform. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosus NV and Rex Trueform.
Diversification Opportunities for Prosus NV and Rex Trueform
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Prosus and Rex is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Prosus NV and Rex Trueform Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rex Trueform 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 Rex Trueform. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rex Trueform Group has no effect on the direction of Prosus NV i.e., Prosus NV and Rex Trueform go up and down completely randomly.
Pair Corralation between Prosus NV and Rex Trueform
Assuming the 90 days trading horizon Prosus NV is expected to under-perform the Rex Trueform. In addition to that, Prosus NV is 1.84 times more volatile than Rex Trueform Group. It trades about -0.15 of its total potential returns per unit of risk. Rex Trueform Group is currently generating about 0.09 per unit of volatility. If you would invest 115,700 in Rex Trueform Group on August 24, 2024 and sell it today you would earn a total of 1,500 from holding Rex Trueform Group or generate 1.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prosus NV vs. Rex Trueform Group
Performance |
| Timeline |
| Prosus NV |
| Rex Trueform Group |
Prosus NV and Rex Trueform Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prosus NV and Rex Trueform
The main advantage of trading using opposite Prosus NV and Rex Trueform positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosus NV position performs unexpectedly, Rex Trueform 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 Rex Trueform will offset losses from the drop in Rex Trueform's long position.| Prosus NV vs. Astoria Investments | Prosus NV vs. Reinet Investments SCA | Prosus NV vs. Lesaka Technologies | Prosus NV vs. Frontier Transport Holdings |
| Rex Trueform vs. Mr Price Group | Rex Trueform vs. Truworths International | Rex Trueform vs. Rex Trueform 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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