Correlation Between Wintec and PLAYWITH

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

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

Diversification Opportunities for Wintec and PLAYWITH

0.21

Correlation Coefficient

Wintec  PLAYWITH

Modest diversification

The 3 months correlation between Wintec and PLAYWITH is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Wintec Co and PLAYWITH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLAYWITH and Wintec 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 Wintec Co are associated (or correlated) with PLAYWITH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLAYWITH has no effect on the direction of Wintec i.e., Wintec and PLAYWITH go up and down completely randomly.

Pair Corralation between Wintec and PLAYWITH

Assuming the 90 days trading horizon Wintec is expected to generate 5.68 times less return on investment than PLAYWITH. In addition to that, Wintec is 1.77 times more volatile than PLAYWITH. It trades about 0.01 of its total potential returns per unit of risk. PLAYWITH is currently generating about 0.06 per unit of volatility. If you would invest  372,500  in PLAYWITH on December 2, 2024 and sell it today you would earn a total of  23,000  from holding PLAYWITH or generate 6.17% return on investment over 90 days.

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

Wintec Co  vs.  PLAYWITH

Wintec

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wintec Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Wintec is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

PLAYWITH

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Wintec and PLAYWITH

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

The idea behind Wintec Co and PLAYWITH 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.