Correlation Between Erste Group and Playmates Toys
Can any of the company-specific risk be diversified away by investing in both Erste Group 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 Erste Group and Playmates Toys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Erste Group Bank and Playmates Toys Limited, you can compare the effects of market volatilities on Erste Group 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 Erste Group with a short position of Playmates Toys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erste Group and Playmates Toys.
Diversification Opportunities for Erste Group and Playmates Toys
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Erste and Playmates is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank and Playmates Toys Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playmates Toys and Erste Group 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 Erste Group Bank 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 Erste Group i.e., Erste Group and Playmates Toys go up and down completely randomly.
Pair Corralation between Erste Group and Playmates Toys
Assuming the 90 days trading horizon Erste Group is expected to generate 1.22 times less return on investment than Playmates Toys. But when comparing it to its historical volatility, Erste Group Bank is 8.17 times less risky than Playmates Toys. It trades about 0.07 of its potential returns per unit of risk. Playmates Toys Limited is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 7.05 in Playmates Toys Limited on November 3, 2024 and sell it today you would lose (0.55) from holding Playmates Toys Limited or give up 7.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Erste Group Bank vs. Playmates Toys Limited
Performance |
| Timeline |
| Erste Group Bank |
| Playmates Toys |
Erste Group and Playmates Toys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erste Group and Playmates Toys
The main advantage of trading using opposite Erste Group and Playmates Toys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erste Group 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.| Erste Group vs. RCS MediaGroup SpA | Erste Group vs. BRIT AMER TOBACCO | Erste Group vs. TRAINLINE PLC LS | Erste Group vs. Hollywood Bowl Group |
| Playmates Toys vs. Sunny Optical Technology | Playmates Toys vs. Richardson Electronics | Playmates Toys vs. FORTRESS BIOTECHPRFA 25 | Playmates Toys vs. ASPEN TECHINC DL |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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