Correlation Between Homecast CoLtd and PLAYWITH
Can any of the company-specific risk be diversified away by investing in both Homecast CoLtd 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 Homecast CoLtd and PLAYWITH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Homecast CoLtd and PLAYWITH, you can compare the effects of market volatilities on Homecast CoLtd 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 Homecast CoLtd with a short position of PLAYWITH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Homecast CoLtd and PLAYWITH.
Diversification Opportunities for Homecast CoLtd and PLAYWITH
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Homecast and PLAYWITH is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Homecast CoLtd and PLAYWITH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLAYWITH and Homecast CoLtd 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 Homecast CoLtd 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 Homecast CoLtd i.e., Homecast CoLtd and PLAYWITH go up and down completely randomly.
Pair Corralation between Homecast CoLtd and PLAYWITH
Assuming the 90 days trading horizon Homecast CoLtd is expected to generate 1.49 times more return on investment than PLAYWITH. However, Homecast CoLtd is 1.49 times more volatile than PLAYWITH. It trades about -0.1 of its potential returns per unit of risk. PLAYWITH is currently generating about -0.22 per unit of risk. If you would invest 241,000 in Homecast CoLtd on October 13, 2024 and sell it today you would lose (14,000) from holding Homecast CoLtd or give up 5.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.0% |
| Values | Daily Returns |
Homecast CoLtd vs. PLAYWITH
Performance |
| Timeline |
| Homecast CoLtd |
| PLAYWITH |
Homecast CoLtd and PLAYWITH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Homecast CoLtd and PLAYWITH
The main advantage of trading using opposite Homecast CoLtd and PLAYWITH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Homecast CoLtd 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.| Homecast CoLtd vs. Korean Reinsurance Co | Homecast CoLtd vs. Cloud Air CoLtd | Homecast CoLtd vs. Samyang Foods Co | Homecast CoLtd vs. Jeju Air Co |
| PLAYWITH vs. Hankook Furniture Co | PLAYWITH vs. Green Cross Medical | PLAYWITH vs. Homecast CoLtd | PLAYWITH vs. DoubleU Games Co |
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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