Correlation Between PlayD and Raontech

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

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

Diversification Opportunities for PlayD and Raontech

-0.13

Correlation Coefficient

PlayD  Raontech

Good diversification

The 3 months correlation between PlayD and Raontech is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding PlayD Co and Raontech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raontech 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 Raontech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raontech has no effect on the direction of PlayD i.e., PlayD and Raontech go up and down completely randomly.

Pair Corralation between PlayD and Raontech

Assuming the 90 days trading horizon PlayD Co is expected to generate 0.79 times more return on investment than Raontech. However, PlayD Co is 1.26 times less risky than Raontech. It trades about 0.04 of its potential returns per unit of risk. Raontech is currently generating about 0.02 per unit of risk. If you would invest  604,000  in PlayD Co on November 29, 2024 and sell it today you would earn a total of  29,000  from holding PlayD Co or generate 4.8% return on investment over 90 days.

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

PlayD Co  vs.  Raontech

PlayD

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PlayD Co are ranked lower than 3 (%) 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 March 2025.

Raontech

Risk-Adjusted Performance

Weak

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

Pair Trading with PlayD and Raontech

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

The idea behind PlayD Co and Raontech 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 CEOs Directory module to screen CEOs from public companies around the world.