Correlation Between Prosus NV and AfroCentric Investment
Can any of the company-specific risk be diversified away by investing in both Prosus NV and AfroCentric Investment 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 AfroCentric Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prosus NV and AfroCentric Investment Corp, you can compare the effects of market volatilities on Prosus NV and AfroCentric Investment 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 AfroCentric Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosus NV and AfroCentric Investment.
Diversification Opportunities for Prosus NV and AfroCentric Investment
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Prosus and AfroCentric is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Prosus NV and AfroCentric Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AfroCentric Investment 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 are associated (or correlated) with AfroCentric Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AfroCentric Investment has no effect on the direction of Prosus NV i.e., Prosus NV and AfroCentric Investment go up and down completely randomly.
Pair Corralation between Prosus NV and AfroCentric Investment
Assuming the 90 days trading horizon Prosus NV is expected to generate 0.31 times more return on investment than AfroCentric Investment. However, Prosus NV is 3.18 times less risky than AfroCentric Investment. It trades about 0.07 of its potential returns per unit of risk. AfroCentric Investment Corp is currently generating about -0.01 per unit of risk. If you would invest 6,593,125 in Prosus NV on September 24, 2024 and sell it today you would earn a total of 895,875 from holding Prosus NV or generate 13.59% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Prosus NV vs. AfroCentric Investment Corp
Performance |
Timeline |
Prosus NV |
AfroCentric Investment |
Prosus NV and AfroCentric Investment Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Prosus NV and AfroCentric Investment
The main advantage of trading using opposite Prosus NV and AfroCentric Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosus NV position performs unexpectedly, AfroCentric Investment 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 AfroCentric Investment will offset losses from the drop in AfroCentric Investment's long position.Prosus NV vs. ABSA Bank Limited | Prosus NV vs. Dipula Income | Prosus NV vs. Pepkor Holdings | Prosus NV vs. Alexander Forbes Grp |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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