Correlation Between Relx PLC and Prosus NV

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

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

Diversification Opportunities for Relx PLC and Prosus NV

-0.08

Correlation Coefficient

Relx PLC  Prosus NV

Good diversification

The 3 months correlation between Relx and Prosus is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Relx PLC and Prosus NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosus NV and Relx PLC 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 Relx PLC 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 Relx PLC i.e., Relx PLC and Prosus NV go up and down completely randomly.

Pair Corralation between Relx PLC and Prosus NV

Assuming the 90 days trading horizon Relx PLC is expected to generate 25.59 times less return on investment than Prosus NV. But when comparing it to its historical volatility, Relx PLC is 1.9 times less risky than Prosus NV. It trades about 0.02 of its potential returns per unit of risk. Prosus NV is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  3,826  in Prosus NV on April 22, 2025 and sell it today you would earn a total of  1,155  from holding Prosus NV or generate 30.19% return on investment over 90 days.

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

Relx PLC  vs.  Prosus NV

Relx PLC

Risk-Adjusted Performance

Weak

Over the last 90 days Relx PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Relx PLC is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Prosus NV

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Prosus NV are ranked lower than 19 (%) 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.

Pair Trading with Relx PLC and Prosus NV

The main advantage of trading using opposite Relx PLC and Prosus NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Relx PLC 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 Relx PLC 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.