Correlation Between Prosus NV and Brimstone Investment

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

Diversification Opportunities for Prosus NV and Brimstone Investment

-0.52

Correlation Coefficient

Prosus NV  Brimstone Investment

Excellent diversification

The 3 months correlation between Prosus and Brimstone is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Prosus NV and Brimstone Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brimstone 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 Brimstone Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brimstone Investment has no effect on the direction of Prosus NV i.e., Prosus NV and Brimstone Investment go up and down completely randomly.

Pair Corralation between Prosus NV and Brimstone Investment

Assuming the 90 days trading horizon Prosus NV is expected to generate 1.18 times more return on investment than Brimstone Investment. However, Prosus NV is 1.18 times more volatile than Brimstone Investment. It trades about 0.09 of its potential returns per unit of risk. Brimstone Investment is currently generating about -0.1 per unit of risk. If you would invest  7,576,300  in Prosus NV on December 23, 2024 and sell it today you would earn a total of  916,100  from holding Prosus NV or generate 12.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Prosus NV  vs.  Brimstone Investment

Prosus NV

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Prosus NV are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Prosus NV exhibited solid returns over the last few months and may actually be approaching a breakup point.

Brimstone Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brimstone Investment 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.

Pair Trading with Prosus NV and Brimstone Investment

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

The idea behind Prosus NV and Brimstone Investment 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 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.