Correlation Between Samlip General and Playgram

Can any of the company-specific risk be diversified away by investing in both Samlip General and Playgram 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 Samlip General and Playgram into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Samlip General Foods and Playgram Co, you can compare the effects of market volatilities on Samlip General and Playgram 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 Samlip General with a short position of Playgram. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samlip General and Playgram.

Diversification Opportunities for Samlip General and Playgram

0.23

Correlation Coefficient

Samlip General  Playgram

Modest diversification

The 3 months correlation between Samlip and Playgram is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Samlip General Foods and Playgram Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playgram and Samlip General 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 Samlip General Foods are associated (or correlated) with Playgram. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playgram has no effect on the direction of Samlip General i.e., Samlip General and Playgram go up and down completely randomly.

Pair Corralation between Samlip General and Playgram

Assuming the 90 days trading horizon Samlip General is expected to generate 5.76 times less return on investment than Playgram. But when comparing it to its historical volatility, Samlip General Foods is 4.18 times less risky than Playgram. It trades about 0.11 of its potential returns per unit of risk. Playgram Co is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  30,200  in Playgram Co on September 21, 2024 and sell it today you would earn a total of  5,900  from holding Playgram Co or generate 19.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Samlip General Foods  vs.  Playgram Co

Samlip General Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Samlip General Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Samlip General is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Playgram

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Playgram Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Playgram may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Samlip General and Playgram

The main advantage of trading using opposite Samlip General and Playgram positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samlip General position performs unexpectedly, Playgram 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 Playgram will offset losses from the drop in Playgram's long position.

The idea behind Samlip General Foods and Playgram Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.