Correlation Between Naspers and AfricaRhodium ETF

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

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

Diversification Opportunities for Naspers and AfricaRhodium ETF

-0.24

Correlation Coefficient

Naspers  AfricaRhodium ETF

Very good diversification

The 3 months correlation between Naspers and AfricaRhodium is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Naspers Limited and AfricaRhodium ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AfricaRhodium ETF 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 AfricaRhodium ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AfricaRhodium ETF has no effect on the direction of Naspers i.e., Naspers and AfricaRhodium ETF go up and down completely randomly.

Pair Corralation between Naspers and AfricaRhodium ETF

Assuming the 90 days trading horizon Naspers Limited is expected to under-perform the AfricaRhodium ETF. In addition to that, Naspers is 2.66 times more volatile than AfricaRhodium ETF. It trades about -0.26 of its total potential returns per unit of risk. AfricaRhodium ETF is currently generating about 0.02 per unit of volatility. If you would invest  7,860,500  in AfricaRhodium ETF on October 24, 2024 and sell it today you would earn a total of  21,300  from holding AfricaRhodium ETF or generate 0.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Naspers Limited  vs.  AfricaRhodium ETF

Naspers Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Naspers Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

AfricaRhodium ETF

Risk-Adjusted Performance

0 of 100

Insignificant

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 latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Naspers and AfricaRhodium ETF

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

The idea behind Naspers Limited and AfricaRhodium ETF 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.