Correlation Between Rex Trueform and Prosus NV
Can any of the company-specific risk be diversified away by investing in both Rex Trueform and Prosus 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 Rex Trueform and Prosus NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rex Trueform Group and Prosus NV, you can compare the effects of market volatilities on Rex Trueform and Prosus 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 Rex Trueform with a short position of Prosus NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rex Trueform and Prosus NV.
Diversification Opportunities for Rex Trueform and Prosus NV
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Rex and Prosus is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Rex Trueform Group and Prosus NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosus NV and Rex Trueform 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 Rex Trueform Group are associated (or correlated) with Prosus NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prosus NV has no effect on the direction of Rex Trueform i.e., Rex Trueform and Prosus NV go up and down completely randomly.
Pair Corralation between Rex Trueform and Prosus NV
Assuming the 90 days trading horizon Rex Trueform Group is expected to generate 0.54 times more return on investment than Prosus NV. However, Rex Trueform Group is 1.84 times less risky than Prosus NV. It trades about 0.09 of its potential returns per unit of risk. Prosus NV is currently generating about -0.15 per unit of risk. 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 |
Rex Trueform Group vs. Prosus NV
Performance |
| Timeline |
| Rex Trueform Group |
| Prosus NV |
Rex Trueform and Prosus NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rex Trueform and Prosus NV
The main advantage of trading using opposite Rex Trueform and Prosus NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rex Trueform position performs unexpectedly, Prosus 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 Prosus NV will offset losses from the drop in Prosus NV's long position.| Rex Trueform vs. Mr Price Group | Rex Trueform vs. Truworths International | Rex Trueform vs. Rex Trueform Group |
| Prosus NV vs. Astoria Investments | Prosus NV vs. Reinet Investments SCA | Prosus NV vs. Lesaka Technologies | Prosus NV vs. Frontier Transport Holdings |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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