Correlation Between AIR PRODCHEMICALS and Playmates Toys
Can any of the company-specific risk be diversified away by investing in both AIR PRODCHEMICALS and Playmates Toys 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 AIR PRODCHEMICALS and Playmates Toys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AIR PRODCHEMICALS and Playmates Toys Limited, you can compare the effects of market volatilities on AIR PRODCHEMICALS and Playmates Toys 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 AIR PRODCHEMICALS with a short position of Playmates Toys. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIR PRODCHEMICALS and Playmates Toys.
Diversification Opportunities for AIR PRODCHEMICALS and Playmates Toys
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between AIR and Playmates is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding AIR PRODCHEMICALS and Playmates Toys Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playmates Toys and AIR PRODCHEMICALS 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 AIR PRODCHEMICALS are associated (or correlated) with Playmates Toys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playmates Toys has no effect on the direction of AIR PRODCHEMICALS i.e., AIR PRODCHEMICALS and Playmates Toys go up and down completely randomly.
Pair Corralation between AIR PRODCHEMICALS and Playmates Toys
Assuming the 90 days trading horizon AIR PRODCHEMICALS is expected to generate 0.11 times more return on investment than Playmates Toys. However, AIR PRODCHEMICALS is 9.14 times less risky than Playmates Toys. It trades about 0.41 of its potential returns per unit of risk. Playmates Toys Limited is currently generating about 0.03 per unit of risk. If you would invest 28,139 in AIR PRODCHEMICALS on October 25, 2024 and sell it today you would earn a total of 2,561 from holding AIR PRODCHEMICALS or generate 9.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AIR PRODCHEMICALS vs. Playmates Toys Limited
Performance |
| Timeline |
| AIR PRODCHEMICALS |
| Playmates Toys |
AIR PRODCHEMICALS and Playmates Toys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AIR PRODCHEMICALS and Playmates Toys
The main advantage of trading using opposite AIR PRODCHEMICALS and Playmates Toys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIR PRODCHEMICALS position performs unexpectedly, Playmates Toys 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 Playmates Toys will offset losses from the drop in Playmates Toys' long position.| AIR PRODCHEMICALS vs. Virtus Investment Partners | AIR PRODCHEMICALS vs. HK Electric Investments | AIR PRODCHEMICALS vs. PennyMac Mortgage Investment | AIR PRODCHEMICALS vs. CDL INVESTMENT |
| Playmates Toys vs. China Datang | Playmates Toys vs. AIR PRODCHEMICALS | Playmates Toys vs. Haverty Furniture Companies | Playmates Toys vs. Addus HomeCare |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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