Correlation Between Prosus NV and Tinybeans Group

Can any of the company-specific risk be diversified away by investing in both Prosus NV and Tinybeans Group 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 Tinybeans Group 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 Tinybeans Group Limited, you can compare the effects of market volatilities on Prosus NV and Tinybeans Group 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 Tinybeans Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosus NV and Tinybeans Group.

Diversification Opportunities for Prosus NV and Tinybeans Group

-0.07

Correlation Coefficient

Prosus NV  Tinybeans Group

Good diversification

The 3 months correlation between Prosus and Tinybeans is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Prosus NV ADR and Tinybeans Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tinybeans Group 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 Tinybeans Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tinybeans Group has no effect on the direction of Prosus NV i.e., Prosus NV and Tinybeans Group go up and down completely randomly.

Pair Corralation between Prosus NV and Tinybeans Group

Assuming the 90 days horizon Prosus NV ADR is expected to generate 0.39 times more return on investment than Tinybeans Group. However, Prosus NV ADR is 2.55 times less risky than Tinybeans Group. It trades about 0.07 of its potential returns per unit of risk. Tinybeans Group Limited is currently generating about -0.22 per unit of risk. If you would invest  816.00  in Prosus NV ADR on November 29, 2024 and sell it today you would earn a total of  70.00  from holding Prosus NV ADR or generate 8.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Prosus NV ADR  vs.  Tinybeans Group Limited

Prosus NV ADR

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Prosus NV ADR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Prosus NV may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Tinybeans Group

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Prosus NV and Tinybeans Group

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

The idea behind Prosus NV ADR and Tinybeans Group Limited 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.