Correlation Between Prosus NV and Kendrion

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

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

Diversification Opportunities for Prosus NV and Kendrion

-0.57

Correlation Coefficient

Prosus NV  Kendrion

Excellent diversification

The 3 months correlation between Prosus and Kendrion is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Prosus NV and Kendrion NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kendrion NV 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 Kendrion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kendrion NV has no effect on the direction of Prosus NV i.e., Prosus NV and Kendrion go up and down completely randomly.

Pair Corralation between Prosus NV and Kendrion

Assuming the 90 days trading horizon Prosus NV is expected to generate 1.12 times more return on investment than Kendrion. However, Prosus NV is 1.12 times more volatile than Kendrion NV. It trades about 0.16 of its potential returns per unit of risk. Kendrion NV is currently generating about -0.18 per unit of risk. If you would invest  3,398  in Prosus NV on September 19, 2024 and sell it today you would earn a total of  637.00  from holding Prosus NV or generate 18.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Prosus NV  vs.  Kendrion NV

Prosus NV

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Prosus NV are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Prosus NV unveiled solid returns over the last few months and may actually be approaching a breakup point.

Kendrion NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kendrion NV 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 somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Prosus NV and Kendrion

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

The idea behind Prosus NV and Kendrion 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.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.