Correlation Between RIWI Corp and PROS Holdings

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

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

Diversification Opportunities for RIWI Corp and PROS Holdings

-0.72

Correlation Coefficient

RIWI Corp  PROS Holdings

Pay attention - limited upside

The 3 months correlation between RIWI and PROS is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding RIWI Corp and PROS Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PROS Holdings and RIWI Corp 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 RIWI Corp are associated (or correlated) with PROS Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PROS Holdings has no effect on the direction of RIWI Corp i.e., RIWI Corp and PROS Holdings go up and down completely randomly.

Pair Corralation between RIWI Corp and PROS Holdings

Assuming the 90 days horizon RIWI Corp is expected to under-perform the PROS Holdings. But the pink sheet apears to be less risky and, when comparing its historical volatility, RIWI Corp is 1.16 times less risky than PROS Holdings. The pink sheet trades about -0.09 of its potential returns per unit of risk. The PROS Holdings is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,730  in PROS Holdings on September 16, 2024 and sell it today you would earn a total of  616.00  from holding PROS Holdings or generate 35.61% return on investment over 90 days.

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

RIWI Corp  vs.  PROS Holdings

RIWI Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

PROS Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PROS Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, PROS Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RIWI Corp and PROS Holdings

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

The idea behind RIWI Corp and PROS Holdings 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.