Correlation Between Argent and Prosus NV

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

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

Diversification Opportunities for Argent and Prosus NV

0.2

Correlation Coefficient

Argent  Prosus NV

Modest diversification

The 3 months correlation between Argent and Prosus is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Argent and Prosus NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosus NV and Argent 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 Argent 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 Argent i.e., Argent and Prosus NV go up and down completely randomly.

Pair Corralation between Argent and Prosus NV

Assuming the 90 days trading horizon Argent is expected to generate 0.53 times more return on investment than Prosus NV. However, Argent is 1.88 times less risky than Prosus NV. It trades about 0.01 of its potential returns per unit of risk. Prosus NV is currently generating about -0.29 per unit of risk. If you would invest  265,000  in Argent on October 12, 2024 and sell it today you would earn a total of  0.00  from holding Argent or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

Argent  vs.  Prosus NV

Argent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Argent has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Argent is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

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. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Argent and Prosus NV

The main advantage of trading using opposite Argent and Prosus NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Argent 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 Argent 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.