Correlation Between Growthpoint Properties and Prosus NV

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

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

Diversification Opportunities for Growthpoint Properties and Prosus NV

-0.38

Correlation Coefficient

Growthpoint Properties  Prosus NV

Very good diversification

The 3 months correlation between Growthpoint and Prosus is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Growthpoint Properties and Prosus NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosus NV and Growthpoint Properties 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 Growthpoint Properties are associated (or correlated) with Prosus NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prosus NV has no effect on the direction of Growthpoint Properties i.e., Growthpoint Properties and Prosus NV go up and down completely randomly.

Pair Corralation between Growthpoint Properties and Prosus NV

Assuming the 90 days trading horizon Growthpoint Properties is expected to generate 35.8 times less return on investment than Prosus NV. But when comparing it to its historical volatility, Growthpoint Properties is 1.73 times less risky than Prosus NV. It trades about 0.01 of its potential returns per unit of risk. Prosus NV is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  6,335,059  in Prosus NV on September 12, 2024 and sell it today you would earn a total of  1,298,441  from holding Prosus NV or generate 20.5% return on investment over 90 days.

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

Growthpoint Properties  vs.  Prosus NV

Growthpoint Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Growthpoint Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Growthpoint Properties is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Prosus NV

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Prosus NV are ranked lower than 13 (%) 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.

Pair Trading with Growthpoint Properties and Prosus NV

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

The idea behind Growthpoint Properties and Prosus NV 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.