Correlation Between PLAYWITH and Grand Korea

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

By analyzing existing cross correlation between PLAYWITH and Grand Korea Leisure, you can compare the effects of market volatilities on PLAYWITH and Grand Korea 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 Grand Korea. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLAYWITH and Grand Korea.

Diversification Opportunities for PLAYWITH and Grand Korea

0.43

Correlation Coefficient

PLAYWITH  Grand Korea

Very weak diversification

The 3 months correlation between PLAYWITH and Grand is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding PLAYWITH and Grand Korea Leisure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Korea Leisure 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 Grand Korea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Korea Leisure has no effect on the direction of PLAYWITH i.e., PLAYWITH and Grand Korea go up and down completely randomly.

Pair Corralation between PLAYWITH and Grand Korea

Assuming the 90 days trading horizon PLAYWITH is expected to under-perform the Grand Korea. In addition to that, PLAYWITH is 2.48 times more volatile than Grand Korea Leisure. It trades about -0.22 of its total potential returns per unit of risk. Grand Korea Leisure is currently generating about 0.01 per unit of volatility. If you would invest  1,167,000  in Grand Korea Leisure on September 3, 2024 and sell it today you would earn a total of  5,000  from holding Grand Korea Leisure or generate 0.43% return on investment over 90 days.

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

PLAYWITH  vs.  Grand Korea Leisure

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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Grand Korea Leisure

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grand Korea Leisure are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Grand Korea is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PLAYWITH and Grand Korea

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

The idea behind PLAYWITH and Grand Korea Leisure 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.