Correlation Between Playmates Toys and Aluminumof China
Can any of the company-specific risk be diversified away by investing in both Playmates Toys and Aluminumof China 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 Aluminumof China 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 Aluminum of, you can compare the effects of market volatilities on Playmates Toys and Aluminumof China 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 Aluminumof China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playmates Toys and Aluminumof China.
Diversification Opportunities for Playmates Toys and Aluminumof China
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Playmates and Aluminumof is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Playmates Toys Limited and Aluminum of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aluminumof China 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 Aluminumof China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aluminumof China has no effect on the direction of Playmates Toys i.e., Playmates Toys and Aluminumof China go up and down completely randomly.
Pair Corralation between Playmates Toys and Aluminumof China
Assuming the 90 days horizon Playmates Toys Limited is expected to generate 2.33 times more return on investment than Aluminumof China. However, Playmates Toys is 2.33 times more volatile than Aluminum of. It trades about 0.08 of its potential returns per unit of risk. Aluminum of is currently generating about 0.05 per unit of risk. If you would invest 1.37 in Playmates Toys Limited on October 16, 2024 and sell it today you would earn a total of 5.13 from holding Playmates Toys Limited or generate 374.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playmates Toys Limited vs. Aluminum of
Performance |
| Timeline |
| Playmates Toys |
| Aluminumof China |
Playmates Toys and Aluminumof China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playmates Toys and Aluminumof China
The main advantage of trading using opposite Playmates Toys and Aluminumof China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playmates Toys position performs unexpectedly, Aluminumof China 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 Aluminumof China will offset losses from the drop in Aluminumof China's long position.| Playmates Toys vs. JSC Halyk bank | Playmates Toys vs. NORTHEAST UTILITIES | Playmates Toys vs. Virtu Financial | Playmates Toys vs. Cars Inc |
| Aluminumof China vs. GOODYEAR T RUBBER | Aluminumof China vs. PLAYTIKA HOLDING DL 01 | Aluminumof China vs. VIVA WINE GROUP | Aluminumof China vs. Playmates Toys Limited |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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