Correlation Between PI Advanced and Playgram

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

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

Diversification Opportunities for PI Advanced and Playgram

0.41

Correlation Coefficient

PI Advanced  Playgram

Very weak diversification

The 3 months correlation between 178920 and Playgram is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding PI Advanced Materials and Playgram Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playgram and PI Advanced 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 PI Advanced Materials 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 PI Advanced i.e., PI Advanced and Playgram go up and down completely randomly.

Pair Corralation between PI Advanced and Playgram

Assuming the 90 days trading horizon PI Advanced Materials is expected to generate 1.03 times more return on investment than Playgram. However, PI Advanced is 1.03 times more volatile than Playgram Co. It trades about 0.08 of its potential returns per unit of risk. Playgram Co is currently generating about -0.03 per unit of risk. If you would invest  1,596,000  in PI Advanced Materials on December 1, 2024 and sell it today you would earn a total of  226,000  from holding PI Advanced Materials or generate 14.16% return on investment over 90 days.

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

PI Advanced Materials  vs.  Playgram Co

PI Advanced Materials

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PI Advanced Materials are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, PI Advanced sustained solid returns over the last few months and may actually be approaching a breakup point.

Playgram

Risk-Adjusted Performance

Very Weak

Over the last 90 days Playgram Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with PI Advanced and Playgram

The main advantage of trading using opposite PI Advanced and Playgram positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PI Advanced 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 PI Advanced Materials 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.