Correlation Between National Plastic and PLAYWITH
Can any of the company-specific risk be diversified away by investing in both National Plastic and PLAYWITH 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 National Plastic and PLAYWITH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Plastic Co and PLAYWITH, you can compare the effects of market volatilities on National Plastic and PLAYWITH 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 National Plastic with a short position of PLAYWITH. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Plastic and PLAYWITH.
Diversification Opportunities for National Plastic and PLAYWITH
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between National and PLAYWITH is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding National Plastic Co and PLAYWITH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLAYWITH and National Plastic 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 National Plastic Co are associated (or correlated) with PLAYWITH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLAYWITH has no effect on the direction of National Plastic i.e., National Plastic and PLAYWITH go up and down completely randomly.
Pair Corralation between National Plastic and PLAYWITH
Assuming the 90 days trading horizon National Plastic Co is expected to under-perform the PLAYWITH. But the stock apears to be less risky and, when comparing its historical volatility, National Plastic Co is 3.14 times less risky than PLAYWITH. The stock trades about -0.59 of its potential returns per unit of risk. The PLAYWITH is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 338,500 in PLAYWITH on October 23, 2024 and sell it today you would lose (8,000) from holding PLAYWITH or give up 2.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.74% |
| Values | Daily Returns |
National Plastic Co vs. PLAYWITH
Performance |
| Timeline |
| National Plastic |
| PLAYWITH |
National Plastic and PLAYWITH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Plastic and PLAYWITH
The main advantage of trading using opposite National Plastic and PLAYWITH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Plastic position performs unexpectedly, PLAYWITH 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 PLAYWITH will offset losses from the drop in PLAYWITH's long position.| National Plastic vs. PJ Electronics Co | National Plastic vs. Hyundai Green Food | National Plastic vs. Sempio Foods Co | National Plastic vs. Nable Communications |
| PLAYWITH vs. Sung Bo Chemicals | PLAYWITH vs. Miwon Chemical | PLAYWITH vs. Dongwoo Farm To | PLAYWITH vs. ENERGYMACHINERY KOREA CoLtd |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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