Correlation Between PlayD and Union Materials
Can any of the company-specific risk be diversified away by investing in both PlayD and Union Materials 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 PlayD and Union Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PlayD Co and Union Materials Corp, you can compare the effects of market volatilities on PlayD and Union Materials 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 PlayD with a short position of Union Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of PlayD and Union Materials.
Diversification Opportunities for PlayD and Union Materials
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between PlayD and Union is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding PlayD Co and Union Materials Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Materials Corp and PlayD 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 PlayD Co are associated (or correlated) with Union Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Materials Corp has no effect on the direction of PlayD i.e., PlayD and Union Materials go up and down completely randomly.
Pair Corralation between PlayD and Union Materials
Assuming the 90 days trading horizon PlayD Co is expected to generate 1.24 times more return on investment than Union Materials. However, PlayD is 1.24 times more volatile than Union Materials Corp. It trades about 0.16 of its potential returns per unit of risk. Union Materials Corp is currently generating about 0.01 per unit of risk. If you would invest 580,000 in PlayD Co on November 3, 2024 and sell it today you would earn a total of 51,000 from holding PlayD Co or generate 8.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PlayD Co vs. Union Materials Corp
Performance |
| Timeline |
| PlayD |
| Union Materials Corp |
PlayD and Union Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PlayD and Union Materials
The main advantage of trading using opposite PlayD and Union Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PlayD position performs unexpectedly, Union Materials 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 Union Materials will offset losses from the drop in Union Materials' long position.| PlayD vs. Hyunwoo Industrial Co | PlayD vs. Daiyang Metal Co | PlayD vs. Ssangyong Information Communication | PlayD vs. Formetal Co |
| Union Materials vs. DB Financial Investment | Union Materials vs. Dongbu Insurance Co | Union Materials vs. Hana Financial | Union Materials vs. Industrial Bank |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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