Correlation Between Prosus NV and Moneysupermarket

Can any of the company-specific risk be diversified away by investing in both Prosus NV and Moneysupermarket 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 Moneysupermarket into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Prosus NV and Moneysupermarket Group PLC, you can compare the effects of market volatilities on Prosus NV and Moneysupermarket 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 Moneysupermarket. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosus NV and Moneysupermarket.

Diversification Opportunities for Prosus NV and Moneysupermarket

0.48

Correlation Coefficient

Prosus NV  Moneysupermarket

Very weak diversification

The 3 months correlation between Prosus and Moneysupermarket is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Prosus NV and Moneysupermarket Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moneysupermarket 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 Moneysupermarket. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moneysupermarket has no effect on the direction of Prosus NV i.e., Prosus NV and Moneysupermarket go up and down completely randomly.

Pair Corralation between Prosus NV and Moneysupermarket

Assuming the 90 days horizon Prosus NV is expected to under-perform the Moneysupermarket. But the stock apears to be less risky and, when comparing its historical volatility, Prosus NV is 1.45 times less risky than Moneysupermarket. The stock trades about -0.06 of its potential returns per unit of risk. The Moneysupermarket Group PLC is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  239.00  in Moneysupermarket Group PLC on October 8, 2024 and sell it today you would lose (14.00) from holding Moneysupermarket Group PLC or give up 5.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Prosus NV  vs.  Moneysupermarket Group PLC

Prosus NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prosus NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Prosus NV is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Moneysupermarket

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Moneysupermarket Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Moneysupermarket is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Prosus NV and Moneysupermarket

The main advantage of trading using opposite Prosus NV and Moneysupermarket positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosus NV position performs unexpectedly, Moneysupermarket 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 Moneysupermarket will offset losses from the drop in Moneysupermarket's long position.

The idea behind Prosus NV and Moneysupermarket Group PLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.