Correlation Between AfricaRhodium ETF and Prosus NV

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

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

Diversification Opportunities for AfricaRhodium ETF and Prosus NV

-0.17

Correlation Coefficient

AfricaRhodium ETF  Prosus NV

Good diversification

The 3 months correlation between AfricaRhodium and Prosus is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding AfricaRhodium ETF and Prosus NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosus NV and AfricaRhodium ETF 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 AfricaRhodium ETF 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 AfricaRhodium ETF i.e., AfricaRhodium ETF and Prosus NV go up and down completely randomly.

Pair Corralation between AfricaRhodium ETF and Prosus NV

Assuming the 90 days trading horizon AfricaRhodium ETF is expected to under-perform the Prosus NV. In addition to that, AfricaRhodium ETF is 1.76 times more volatile than Prosus NV. It trades about -0.02 of its total potential returns per unit of risk. Prosus NV is currently generating about 0.18 per unit of volatility. If you would invest  6,324,860  in Prosus NV on September 15, 2024 and sell it today you would earn a total of  1,352,540  from holding Prosus NV or generate 21.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

AfricaRhodium ETF  vs.  Prosus NV

AfricaRhodium ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AfricaRhodium ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, AfricaRhodium ETF is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Prosus NV

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Prosus NV are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Prosus NV exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AfricaRhodium ETF and Prosus NV

The main advantage of trading using opposite AfricaRhodium ETF and Prosus NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AfricaRhodium ETF 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 AfricaRhodium ETF 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.