Correlation Between YY and Prosus
Can any of the company-specific risk be diversified away by investing in both YY and Prosus 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 YY and Prosus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between YY Inc Class and Prosus, you can compare the effects of market volatilities on YY and Prosus 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 YY with a short position of Prosus. Check out your portfolio center. Please also check ongoing floating volatility patterns of YY and Prosus.
Diversification Opportunities for YY and Prosus
Good diversification
The 3 months correlation between YY and Prosus is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding YY Inc Class and Prosus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosus and YY 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 YY Inc Class are associated (or correlated) with Prosus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prosus has no effect on the direction of YY i.e., YY and Prosus go up and down completely randomly.
Pair Corralation between YY and Prosus
Allowing for the 90-day total investment horizon YY Inc Class is expected to generate 1.55 times more return on investment than Prosus. However, YY is 1.55 times more volatile than Prosus. It trades about 0.06 of its potential returns per unit of risk. Prosus is currently generating about -0.22 per unit of risk. If you would invest 3,400 in YY Inc Class on August 28, 2024 and sell it today you would earn a total of 75.00 from holding YY Inc Class or generate 2.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
YY Inc Class vs. Prosus
Performance |
| Timeline |
| YY Inc Class |
| Prosus |
YY and Prosus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with YY and Prosus
The main advantage of trading using opposite YY and Prosus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YY position performs unexpectedly, Prosus 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 will offset losses from the drop in Prosus' long position.| YY vs. Weibo Corp | YY vs. DouYu International Holdings | YY vs. Tencent Music Entertainment | YY vs. Autohome |
| Prosus vs. Tencent Holdings | Prosus vs. Autohome | Prosus vs. Arena Group Holdings | Prosus vs. Golden Grail Technology |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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