Correlation Between Clicks and Naspers

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

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

Diversification Opportunities for Clicks and Naspers

0.03

Correlation Coefficient

Clicks  Naspers

Significant diversification

The 3 months correlation between Clicks and Naspers is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Clicks and Naspers Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naspers Limited and Clicks 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 Clicks are associated (or correlated) with Naspers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naspers Limited has no effect on the direction of Clicks i.e., Clicks and Naspers go up and down completely randomly.

Pair Corralation between Clicks and Naspers

Assuming the 90 days trading horizon Clicks is expected to under-perform the Naspers. But the stock apears to be less risky and, when comparing its historical volatility, Clicks is 1.44 times less risky than Naspers. The stock trades about -0.07 of its potential returns per unit of risk. The Naspers Limited is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  42,079,800  in Naspers Limited on September 27, 2024 and sell it today you would earn a total of  670,200  from holding Naspers Limited or generate 1.59% return on investment over 90 days.

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

Clicks  vs.  Naspers Limited

Clicks

Risk-Adjusted Performance

0 of 100

Very Weak

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

Naspers Limited

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Naspers Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Naspers is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Clicks and Naspers

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

The idea behind Clicks and Naspers Limited 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.