Correlation Between ENERGYMACHINERY KOREA and Playgram

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

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

Diversification Opportunities for ENERGYMACHINERY KOREA and Playgram

0.15

Correlation Coefficient

ENERGYMACHINERY KOREA  Playgram

Average diversification

The 3 months correlation between ENERGYMACHINERY and Playgram is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding ENERGYMACHINERY KOREA CoLtd and Playgram Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playgram and ENERGYMACHINERY KOREA 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 ENERGYMACHINERY KOREA CoLtd 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 ENERGYMACHINERY KOREA i.e., ENERGYMACHINERY KOREA and Playgram go up and down completely randomly.

Pair Corralation between ENERGYMACHINERY KOREA and Playgram

Assuming the 90 days trading horizon ENERGYMACHINERY KOREA CoLtd is expected to generate 0.57 times more return on investment than Playgram. However, ENERGYMACHINERY KOREA CoLtd is 1.76 times less risky than Playgram. It trades about 0.01 of its potential returns per unit of risk. Playgram Co is currently generating about -0.01 per unit of risk. If you would invest  229,000  in ENERGYMACHINERY KOREA CoLtd on October 1, 2024 and sell it today you would lose (4,000) from holding ENERGYMACHINERY KOREA CoLtd or give up 1.75% of portfolio value over 90 days.

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

ENERGYMACHINERY KOREA CoLtd  vs.  Playgram Co

ENERGYMACHINERY KOREA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ENERGYMACHINERY KOREA CoLtd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ENERGYMACHINERY KOREA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Playgram

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Playgram Co are ranked lower than 2 (%) 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 ENERGYMACHINERY KOREA and Playgram

The main advantage of trading using opposite ENERGYMACHINERY KOREA and Playgram positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ENERGYMACHINERY KOREA 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 ENERGYMACHINERY KOREA CoLtd 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.