Correlation Between Playmates Toys and Peel Mining
Can any of the company-specific risk be diversified away by investing in both Playmates Toys and Peel Mining 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 Peel Mining 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 Peel Mining Limited, you can compare the effects of market volatilities on Playmates Toys and Peel Mining 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 Peel Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playmates Toys and Peel Mining.
Diversification Opportunities for Playmates Toys and Peel Mining
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Playmates and Peel is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Playmates Toys Limited and Peel Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peel Mining Limited 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 Peel Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peel Mining Limited has no effect on the direction of Playmates Toys i.e., Playmates Toys and Peel Mining go up and down completely randomly.
Pair Corralation between Playmates Toys and Peel Mining
Assuming the 90 days horizon Playmates Toys Limited is expected to generate 2.08 times more return on investment than Peel Mining. However, Playmates Toys is 2.08 times more volatile than Peel Mining Limited. It trades about -0.03 of its potential returns per unit of risk. Peel Mining Limited is currently generating about -0.35 per unit of risk. If you would invest 6.70 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 2.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playmates Toys Limited vs. Peel Mining Limited
Performance |
| Timeline |
| Playmates Toys |
| Peel Mining Limited |
Playmates Toys and Peel Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playmates Toys and Peel Mining
The main advantage of trading using opposite Playmates Toys and Peel Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playmates Toys position performs unexpectedly, Peel Mining 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 Peel Mining will offset losses from the drop in Peel Mining's long position.| Playmates Toys vs. JSC Halyk bank | Playmates Toys vs. NORTHEAST UTILITIES | Playmates Toys vs. Virtu Financial | Playmates Toys vs. Cars Inc |
| Peel Mining vs. Playmates Toys Limited | Peel Mining vs. Easy Software AG | Peel Mining vs. Amkor Technology | Peel Mining vs. Digilife Technologies 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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