Correlation Between Accenture Plc and PROSUS NV

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

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

Diversification Opportunities for Accenture Plc and PROSUS NV

0.13

Correlation Coefficient

Accenture Plc  PROSUS NV

Average diversification

The 3 months correlation between Accenture and PROSUS is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Accenture plc and PROSUS NV ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PROSUS NV ADR and Accenture Plc 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 Accenture plc 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 ADR has no effect on the direction of Accenture Plc i.e., Accenture Plc and PROSUS NV go up and down completely randomly.

Pair Corralation between Accenture Plc and PROSUS NV

Assuming the 90 days horizon Accenture plc is expected to under-perform the PROSUS NV. But the stock apears to be less risky and, when comparing its historical volatility, Accenture plc is 1.39 times less risky than PROSUS NV. The stock trades about -0.01 of its potential returns per unit of risk. The PROSUS NV ADR is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  765.00  in PROSUS NV ADR on December 1, 2024 and sell it today you would earn a total of  65.00  from holding PROSUS NV ADR or generate 8.5% return on investment over 90 days.

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

Accenture plc  vs.  PROSUS NV ADR

Accenture plc

Risk-Adjusted Performance

Very Weak

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

PROSUS NV ADR

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PROSUS NV ADR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PROSUS NV may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Accenture Plc and PROSUS NV

The main advantage of trading using opposite Accenture Plc and PROSUS NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Accenture Plc 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 Accenture plc and PROSUS NV ADR 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.