Correlation Between Playmates Toys and ALGOMA STEEL
Can any of the company-specific risk be diversified away by investing in both Playmates Toys and ALGOMA STEEL 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 Playmates Toys and ALGOMA STEEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Playmates Toys Limited and ALGOMA STEEL GROUP, you can compare the effects of market volatilities on Playmates Toys and ALGOMA STEEL 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 Playmates Toys with a short position of ALGOMA STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playmates Toys and ALGOMA STEEL.
Diversification Opportunities for Playmates Toys and ALGOMA STEEL
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Playmates and ALGOMA is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Playmates Toys Limited and ALGOMA STEEL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALGOMA STEEL GROUP and Playmates Toys 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 Playmates Toys Limited are associated (or correlated) with ALGOMA STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALGOMA STEEL GROUP has no effect on the direction of Playmates Toys i.e., Playmates Toys and ALGOMA STEEL go up and down completely randomly.
Pair Corralation between Playmates Toys and ALGOMA STEEL
Assuming the 90 days horizon Playmates Toys Limited is expected to generate 1.15 times more return on investment than ALGOMA STEEL. However, Playmates Toys is 1.15 times more volatile than ALGOMA STEEL GROUP. It trades about -0.02 of its potential returns per unit of risk. ALGOMA STEEL GROUP is currently generating about -0.25 per unit of risk. If you would invest 6.80 in Playmates Toys Limited on October 16, 2024 and sell it today you would lose (0.20) from holding Playmates Toys Limited or give up 2.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playmates Toys Limited vs. ALGOMA STEEL GROUP
Performance |
| Timeline |
| Playmates Toys |
| ALGOMA STEEL GROUP |
Playmates Toys and ALGOMA STEEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playmates Toys and ALGOMA STEEL
The main advantage of trading using opposite Playmates Toys and ALGOMA STEEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playmates Toys position performs unexpectedly, ALGOMA STEEL 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 ALGOMA STEEL will offset losses from the drop in ALGOMA STEEL's long position.| Playmates Toys vs. AGRICULTBK HADR25 YC | Playmates Toys vs. Sterling Construction | Playmates Toys vs. AM EAGLE OUTFITTERS | Playmates Toys vs. Federal Agricultural Mortgage |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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