Correlation Between GS Retail and PLAYWITH
Can any of the company-specific risk be diversified away by investing in both GS Retail 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 GS Retail and PLAYWITH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GS Retail Co and PLAYWITH, you can compare the effects of market volatilities on GS Retail 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 GS Retail with a short position of PLAYWITH. Check out your portfolio center. Please also check ongoing floating volatility patterns of GS Retail and PLAYWITH.
Diversification Opportunities for GS Retail and PLAYWITH
Poor diversification
The 3 months correlation between 007070 and PLAYWITH is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding GS Retail Co and PLAYWITH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLAYWITH and GS Retail 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 GS Retail 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 GS Retail i.e., GS Retail and PLAYWITH go up and down completely randomly.
Pair Corralation between GS Retail and PLAYWITH
Assuming the 90 days trading horizon GS Retail Co is expected to under-perform the PLAYWITH. In addition to that, GS Retail is 1.04 times more volatile than PLAYWITH. It trades about -0.24 of its total potential returns per unit of risk. PLAYWITH is currently generating about -0.04 per unit of volatility. If you would invest 334,500 in PLAYWITH on October 30, 2024 and sell it today you would lose (4,500) from holding PLAYWITH or give up 1.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GS Retail Co vs. PLAYWITH
Performance |
| Timeline |
| GS Retail |
| PLAYWITH |
GS Retail and PLAYWITH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GS Retail and PLAYWITH
The main advantage of trading using opposite GS Retail and PLAYWITH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GS Retail 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.| GS Retail vs. DONGKUK STEEL MILL | GS Retail vs. Shin Steel Co | GS Retail vs. Solution Advanced Technology | GS Retail vs. Digital Imaging Technology |
| PLAYWITH vs. Clean Science co | PLAYWITH vs. Korean Reinsurance Co | PLAYWITH vs. Settlebank | PLAYWITH vs. Shinhan Financial Group |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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