Correlation Between PLAYWITH and Hannong Chemicals
Can any of the company-specific risk be diversified away by investing in both PLAYWITH and Hannong Chemicals 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 PLAYWITH and Hannong Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PLAYWITH and Hannong Chemicals, you can compare the effects of market volatilities on PLAYWITH and Hannong Chemicals 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 PLAYWITH with a short position of Hannong Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLAYWITH and Hannong Chemicals.
Diversification Opportunities for PLAYWITH and Hannong Chemicals
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PLAYWITH and Hannong is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding PLAYWITH and Hannong Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hannong Chemicals and PLAYWITH 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 PLAYWITH are associated (or correlated) with Hannong Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hannong Chemicals has no effect on the direction of PLAYWITH i.e., PLAYWITH and Hannong Chemicals go up and down completely randomly.
Pair Corralation between PLAYWITH and Hannong Chemicals
Assuming the 90 days trading horizon PLAYWITH is expected to under-perform the Hannong Chemicals. But the stock apears to be less risky and, when comparing its historical volatility, PLAYWITH is 2.15 times less risky than Hannong Chemicals. The stock trades about -0.29 of its potential returns per unit of risk. The Hannong Chemicals is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 1,431,000 in Hannong Chemicals on November 7, 2024 and sell it today you would lose (62,000) from holding Hannong Chemicals or give up 4.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PLAYWITH vs. Hannong Chemicals
Performance |
| Timeline |
| PLAYWITH |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Hannong Chemicals |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
PLAYWITH and Hannong Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PLAYWITH and Hannong Chemicals
The main advantage of trading using opposite PLAYWITH and Hannong Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PLAYWITH position performs unexpectedly, Hannong Chemicals 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 Hannong Chemicals will offset losses from the drop in Hannong Chemicals' long position.| PLAYWITH vs. Hanwha Chemical Corp | PLAYWITH vs. FNSTech Co | PLAYWITH vs. Hansol Chemical Co | PLAYWITH vs. Ewon Comfortech Co |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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