Correlation Between Australian Agricultural and Prosus NV

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

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

Diversification Opportunities for Australian Agricultural and Prosus NV

-0.3

Correlation Coefficient

Australian Agricultural  Prosus NV

Very good diversification

The 3 months correlation between Australian and Prosus is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Australian Agricultural and Prosus NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosus NV and Australian Agricultural 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 Australian Agricultural 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 Australian Agricultural i.e., Australian Agricultural and Prosus NV go up and down completely randomly.

Pair Corralation between Australian Agricultural and Prosus NV

Assuming the 90 days horizon Australian Agricultural is expected to under-perform the Prosus NV. In addition to that, Australian Agricultural is 1.16 times more volatile than Prosus NV. It trades about 0.0 of its total potential returns per unit of risk. Prosus NV is currently generating about 0.23 per unit of volatility. If you would invest  3,977  in Prosus NV on April 24, 2025 and sell it today you would earn a total of  1,016  from holding Prosus NV or generate 25.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Australian Agricultural  vs.  Prosus NV

Australian Agricultural

Risk-Adjusted Performance

Very Weak

Over the last 90 days Australian Agricultural has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Australian Agricultural is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Prosus NV

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Prosus NV are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Prosus NV reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Australian Agricultural and Prosus NV

The main advantage of trading using opposite Australian Agricultural and Prosus NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Agricultural 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 Australian Agricultural 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.