Correlation Between Prosus NV and RDE, Common

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

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

Diversification Opportunities for Prosus NV and RDE, Common

-0.18

Correlation Coefficient

Prosus NV  RDE, Common

Good diversification

The 3 months correlation between Prosus and RDE, is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Prosus NV ADR and RDE, Common Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RDE, Common Stock and Prosus NV 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 Prosus NV ADR are associated (or correlated) with RDE, Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RDE, Common Stock has no effect on the direction of Prosus NV i.e., Prosus NV and RDE, Common go up and down completely randomly.

Pair Corralation between Prosus NV and RDE, Common

Assuming the 90 days horizon Prosus NV ADR is expected to generate 0.31 times more return on investment than RDE, Common. However, Prosus NV ADR is 3.22 times less risky than RDE, Common. It trades about 0.14 of its potential returns per unit of risk. RDE, Common Stock is currently generating about -0.28 per unit of risk. If you would invest  714.00  in Prosus NV ADR on September 12, 2024 and sell it today you would earn a total of  142.00  from holding Prosus NV ADR or generate 19.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	63.49%
Values	Daily Returns

Prosus NV ADR  vs.  RDE, Common Stock

Prosus NV ADR

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Prosus NV ADR are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Prosus NV showed solid returns over the last few months and may actually be approaching a breakup point.

RDE, Common Stock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RDE, Common Stock has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Prosus NV and RDE, Common

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

The idea behind Prosus NV ADR and RDE, Common Stock 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.