Correlation Between PLAYWITH and AeroSpace Technology

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

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

Diversification Opportunities for PLAYWITH and AeroSpace Technology

0.52

Correlation Coefficient

PLAYWITH  AeroSpace Technology

Very weak diversification

The 3 months correlation between PLAYWITH and AeroSpace is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding PLAYWITH and AeroSpace Technology of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AeroSpace Technology and PLAYWITH 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 PLAYWITH are associated (or correlated) with AeroSpace Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AeroSpace Technology has no effect on the direction of PLAYWITH i.e., PLAYWITH and AeroSpace Technology go up and down completely randomly.

Pair Corralation between PLAYWITH and AeroSpace Technology

Assuming the 90 days trading horizon PLAYWITH is expected to generate 0.58 times more return on investment than AeroSpace Technology. However, PLAYWITH is 1.74 times less risky than AeroSpace Technology. It trades about -0.02 of its potential returns per unit of risk. AeroSpace Technology of is currently generating about -0.04 per unit of risk. If you would invest  576,000  in PLAYWITH on October 22, 2024 and sell it today you would lose (240,500) from holding PLAYWITH or give up 41.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.84%
Values	Daily Returns

PLAYWITH  vs.  AeroSpace Technology of

PLAYWITH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PLAYWITH has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

AeroSpace Technology

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AeroSpace Technology of are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, AeroSpace Technology may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with PLAYWITH and AeroSpace Technology

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

The idea behind PLAYWITH and AeroSpace Technology of 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.