Correlation Between Challenger and Playside Studios
Can any of the company-specific risk be diversified away by investing in both Challenger and Playside Studios 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 Challenger and Playside Studios into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Challenger and Playside Studios, you can compare the effects of market volatilities on Challenger and Playside Studios 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 Challenger with a short position of Playside Studios. Check out your portfolio center. Please also check ongoing floating volatility patterns of Challenger and Playside Studios.
Diversification Opportunities for Challenger and Playside Studios
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Challenger and Playside is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Challenger and Playside Studios in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playside Studios and Challenger 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 Challenger are associated (or correlated) with Playside Studios. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playside Studios has no effect on the direction of Challenger i.e., Challenger and Playside Studios go up and down completely randomly.
Pair Corralation between Challenger and Playside Studios
Assuming the 90 days trading horizon Challenger is expected to generate 0.36 times more return on investment than Playside Studios. However, Challenger is 2.77 times less risky than Playside Studios. It trades about 0.03 of its potential returns per unit of risk. Playside Studios is currently generating about -0.05 per unit of risk. If you would invest 608.00 in Challenger on October 26, 2024 and sell it today you would earn a total of 6.00 from holding Challenger or generate 0.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Challenger vs. Playside Studios
Performance |
| Timeline |
| Challenger |
| Playside Studios |
Challenger and Playside Studios Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Challenger and Playside Studios
The main advantage of trading using opposite Challenger and Playside Studios positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Challenger position performs unexpectedly, Playside Studios 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 Playside Studios will offset losses from the drop in Playside Studios' long position.| Challenger vs. Bio Gene Technology | Challenger vs. Step One Clothing | Challenger vs. EROAD | Challenger vs. Cosmo Metals |
| Playside Studios vs. Aneka Tambang Tbk | Playside Studios vs. Macquarie Group | Playside Studios vs. Macquarie Group Ltd | Playside Studios vs. Challenger |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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