Correlation Between Naspers and Quizam Media

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

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

Diversification Opportunities for Naspers and Quizam Media

-0.02

Correlation Coefficient

Naspers  Quizam Media

Good diversification

The 3 months correlation between Naspers and Quizam is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Naspers Limited and Quizam Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quizam Media and Naspers 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 Naspers Limited are associated (or correlated) with Quizam Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quizam Media has no effect on the direction of Naspers i.e., Naspers and Quizam Media go up and down completely randomly.

Pair Corralation between Naspers and Quizam Media

Assuming the 90 days horizon Naspers Limited is expected to generate 0.4 times more return on investment than Quizam Media. However, Naspers Limited is 2.49 times less risky than Quizam Media. It trades about 0.13 of its potential returns per unit of risk. Quizam Media is currently generating about -0.12 per unit of risk. If you would invest  19,610  in Naspers Limited on September 12, 2024 and sell it today you would earn a total of  4,510  from holding Naspers Limited or generate 23.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Naspers Limited  vs.  Quizam Media

Naspers Limited

Risk-Adjusted Performance

10 of 100

OK

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

Quizam Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quizam Media has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Naspers and Quizam Media

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

The idea behind Naspers Limited and Quizam Media 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.