Correlation Between Prosus NV and Evolution

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

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

Diversification Opportunities for Prosus NV and Evolution

-0.09

Correlation Coefficient

Prosus NV  Evolution

Good diversification

The 3 months correlation between Prosus and Evolution is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Prosus NV and Evolution AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution AB 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 Evolution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution AB has no effect on the direction of Prosus NV i.e., Prosus NV and Evolution go up and down completely randomly.

Pair Corralation between Prosus NV and Evolution

Assuming the 90 days trading horizon Prosus NV is expected to generate 0.52 times more return on investment than Evolution. However, Prosus NV is 1.94 times less risky than Evolution. It trades about 0.22 of its potential returns per unit of risk. Evolution AB is currently generating about 0.05 per unit of risk. If you would invest  3,992  in Prosus NV on April 23, 2025 and sell it today you would earn a total of  1,003  from holding Prosus NV or generate 25.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.75%
Values	Daily Returns

Prosus NV  vs.  Evolution AB

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. 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.

Evolution AB

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Evolution AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Evolution may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Prosus NV and Evolution

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

The idea behind Prosus NV and Evolution AB 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.