Correlation Between Playside Studios and Hammer Metals
Can any of the company-specific risk be diversified away by investing in both Playside Studios and Hammer Metals 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 Playside Studios and Hammer Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Playside Studios and Hammer Metals, you can compare the effects of market volatilities on Playside Studios and Hammer Metals 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 Playside Studios with a short position of Hammer Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playside Studios and Hammer Metals.
Diversification Opportunities for Playside Studios and Hammer Metals
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Playside and Hammer is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Playside Studios and Hammer Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hammer Metals and Playside Studios 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 Playside Studios are associated (or correlated) with Hammer Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hammer Metals has no effect on the direction of Playside Studios i.e., Playside Studios and Hammer Metals go up and down completely randomly.
Pair Corralation between Playside Studios and Hammer Metals
Assuming the 90 days trading horizon Playside Studios is expected to generate 0.85 times more return on investment than Hammer Metals. However, Playside Studios is 1.17 times less risky than Hammer Metals. It trades about 0.01 of its potential returns per unit of risk. Hammer Metals is currently generating about -0.01 per unit of risk. If you would invest 48.00 in Playside Studios on October 30, 2024 and sell it today you would lose (11.00) from holding Playside Studios or give up 22.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playside Studios vs. Hammer Metals
Performance |
| Timeline |
| Playside Studios |
| Hammer Metals |
Playside Studios and Hammer Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playside Studios and Hammer Metals
The main advantage of trading using opposite Playside Studios and Hammer Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playside Studios position performs unexpectedly, Hammer Metals 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 Hammer Metals will offset losses from the drop in Hammer Metals' long position.| Playside Studios vs. Aneka Tambang Tbk | Playside Studios vs. Macquarie Group | Playside Studios vs. Macquarie Group Ltd | Playside Studios vs. Challenger |
| Hammer Metals vs. Macquarie Technology Group | Hammer Metals vs. Dalaroo Metals | Hammer Metals vs. Super Retail Group | Hammer Metals vs. Computershare |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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