Correlation Between PLAYWITH and AfreecaTV
Can any of the company-specific risk be diversified away by investing in both PLAYWITH and AfreecaTV 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 AfreecaTV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PLAYWITH and AfreecaTV Co, you can compare the effects of market volatilities on PLAYWITH and AfreecaTV 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 AfreecaTV. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLAYWITH and AfreecaTV.
Diversification Opportunities for PLAYWITH and AfreecaTV
Poor diversification
The 3 months correlation between PLAYWITH and AfreecaTV is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding PLAYWITH and AfreecaTV Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AfreecaTV 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 AfreecaTV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AfreecaTV has no effect on the direction of PLAYWITH i.e., PLAYWITH and AfreecaTV go up and down completely randomly.
Pair Corralation between PLAYWITH and AfreecaTV
Assuming the 90 days trading horizon PLAYWITH is expected to under-perform the AfreecaTV. In addition to that, PLAYWITH is 1.06 times more volatile than AfreecaTV Co. It trades about -0.12 of its total potential returns per unit of risk. AfreecaTV Co is currently generating about 0.15 per unit of volatility. If you would invest 9,050,000 in AfreecaTV Co on August 28, 2024 and sell it today you would earn a total of 760,000 from holding AfreecaTV Co or generate 8.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PLAYWITH vs. AfreecaTV Co
Performance |
| Timeline |
| PLAYWITH |
| AfreecaTV |
PLAYWITH and AfreecaTV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PLAYWITH and AfreecaTV
The main advantage of trading using opposite PLAYWITH and AfreecaTV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PLAYWITH position performs unexpectedly, AfreecaTV 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 AfreecaTV will offset losses from the drop in AfreecaTV's long position.The idea behind PLAYWITH and AfreecaTV Co 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.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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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