Correlation Between Zhongsheng Group and Prosus NV

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

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

Diversification Opportunities for Zhongsheng Group and Prosus NV

-0.19

Correlation Coefficient

Zhongsheng Group  Prosus NV

Good diversification

The 3 months correlation between Zhongsheng and Prosus is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Zhongsheng Group Holdings and Prosus NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosus NV and Zhongsheng Group 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 Zhongsheng Group Holdings 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 Zhongsheng Group i.e., Zhongsheng Group and Prosus NV go up and down completely randomly.

Pair Corralation between Zhongsheng Group and Prosus NV

Assuming the 90 days horizon Zhongsheng Group Holdings is expected to generate 5.12 times more return on investment than Prosus NV. However, Zhongsheng Group is 5.12 times more volatile than Prosus NV. It trades about 0.08 of its potential returns per unit of risk. Prosus NV is currently generating about -0.03 per unit of risk. If you would invest  144.00  in Zhongsheng Group Holdings on October 7, 2024 and sell it today you would earn a total of  18.00  from holding Zhongsheng Group Holdings or generate 12.5% return on investment over 90 days.

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

Zhongsheng Group Holdings  vs.  Prosus NV

Zhongsheng Group Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Zhongsheng Group and Prosus NV

The main advantage of trading using opposite Zhongsheng Group and Prosus NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhongsheng Group 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.

The idea behind Zhongsheng Group Holdings and Prosus NV 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.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.