Correlation Between PLAYWITH and KG Eco

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

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

Diversification Opportunities for PLAYWITH and KG Eco

0.48

Correlation Coefficient

PLAYWITH  KG Eco

Very weak diversification

The 3 months correlation between PLAYWITH and 151860 is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding PLAYWITH and KG Eco Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KG Eco 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 KG Eco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KG Eco Technology has no effect on the direction of PLAYWITH i.e., PLAYWITH and KG Eco go up and down completely randomly.

Pair Corralation between PLAYWITH and KG Eco

Assuming the 90 days trading horizon PLAYWITH is expected to generate 1.08 times more return on investment than KG Eco. However, PLAYWITH is 1.08 times more volatile than KG Eco Technology. It trades about -0.02 of its potential returns per unit of risk. KG Eco Technology is currently generating about -0.05 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	99.74%
Values	Daily Returns

PLAYWITH  vs.  KG Eco Technology

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.

KG Eco Technology

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KG Eco Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, KG Eco 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 KG Eco

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

The idea behind PLAYWITH and KG Eco Technology 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.