Correlation Between MTY Food and Prosus NV

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

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

Diversification Opportunities for MTY Food and Prosus NV

0.24

Correlation Coefficient

MTY Food  Prosus NV

Modest diversification

The 3 months correlation between MTY and Prosus is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding MTY Food Group and Prosus NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosus NV and MTY Food 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 MTY Food 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 MTY Food i.e., MTY Food and Prosus NV go up and down completely randomly.

Pair Corralation between MTY Food and Prosus NV

Assuming the 90 days horizon MTY Food Group is expected to under-perform the Prosus NV. But the stock apears to be less risky and, when comparing its historical volatility, MTY Food Group is 1.15 times less risky than Prosus NV. The stock trades about -0.02 of its potential returns per unit of risk. The Prosus NV is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  3,328  in Prosus NV on October 26, 2024 and sell it today you would earn a total of  235.00  from holding Prosus NV or generate 7.06% return on investment over 90 days.

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

MTY Food Group  vs.  Prosus NV

MTY Food Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MTY Food Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, MTY Food reported solid returns over the last few months and may actually be approaching a breakup point.

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 fragile 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 MTY Food and Prosus NV

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

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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.