Correlation Between PlayD and Camus Engineering

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

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

Diversification Opportunities for PlayD and Camus Engineering

0.23

Correlation Coefficient

PlayD  Camus Engineering

Modest diversification

The 3 months correlation between PlayD and Camus is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding PlayD Co and Camus Engineering Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Camus Engineering and PlayD 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 PlayD Co are associated (or correlated) with Camus Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Camus Engineering has no effect on the direction of PlayD i.e., PlayD and Camus Engineering go up and down completely randomly.

Pair Corralation between PlayD and Camus Engineering

Assuming the 90 days trading horizon PlayD is expected to generate 1.11 times less return on investment than Camus Engineering. But when comparing it to its historical volatility, PlayD Co is 1.35 times less risky than Camus Engineering. It trades about 0.06 of its potential returns per unit of risk. Camus Engineering Construction is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  133,000  in Camus Engineering Construction on October 23, 2024 and sell it today you would earn a total of  9,900  from holding Camus Engineering Construction or generate 7.44% return on investment over 90 days.

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

PlayD Co  vs.  Camus Engineering Construction

PlayD

Risk-Adjusted Performance

4 of 100

Insignificant

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

Camus Engineering

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Camus Engineering Construction are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Camus Engineering sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PlayD and Camus Engineering

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

The idea behind PlayD Co and Camus Engineering Construction 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.