Correlation Between Naspers and Roku

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

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

Diversification Opportunities for Naspers and Roku

0.0

Correlation Coefficient

Naspers  Roku

Pay attention - limited upside

The 3 months correlation between Naspers and Roku is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Naspers Ltd ADR and Roku Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roku Inc 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 Ltd ADR are associated (or correlated) with Roku. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roku Inc has no effect on the direction of Naspers i.e., Naspers and Roku go up and down completely randomly.

Pair Corralation between Naspers and Roku

If you would invest  7,489  in Roku Inc on December 28, 2024 and sell it today you would lose (240.00) from holding Roku Inc or give up 3.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Naspers Ltd ADR  vs.  Roku Inc

Naspers Ltd ADR

Risk-Adjusted Performance

Very Weak

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

Roku Inc

Risk-Adjusted Performance

Weak

Over the last 90 days Roku Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward-looking signals, Roku is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Naspers and Roku

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

The idea behind Naspers Ltd ADR and Roku Inc 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.