Correlation Between RENEWI and Prosus NV

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

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

Diversification Opportunities for RENEWI and Prosus NV

-0.46

Correlation Coefficient

RENEWI  Prosus NV

Very good diversification

The 3 months correlation between RENEWI and Prosus is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding RENEWI and Prosus NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosus NV and RENEWI 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 RENEWI 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 RENEWI i.e., RENEWI and Prosus NV go up and down completely randomly.

Pair Corralation between RENEWI and Prosus NV

Assuming the 90 days trading horizon RENEWI is expected to under-perform the Prosus NV. In addition to that, RENEWI is 7.54 times more volatile than Prosus NV. It trades about -0.14 of its total potential returns per unit of risk. Prosus NV is currently generating about 0.25 per unit of volatility. 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	Very Weak
Accuracy	96.88%
Values	Daily Returns

RENEWI  vs.  Prosus NV

RENEWI

Risk-Adjusted Performance

Very Weak

Over the last 90 days RENEWI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward indicators remain comparatively stable which may send shares a bit higher in August 2025. The newest uproar may also be a sign of mid-term up-swing for the firm 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 RENEWI and Prosus NV

The main advantage of trading using opposite RENEWI and Prosus NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RENEWI 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 RENEWI 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.