Correlation Between Playmates Toys and PPHE HOTEL

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

By analyzing existing cross correlation between Playmates Toys Limited and PPHE HOTEL GROUP, you can compare the effects of market volatilities on Playmates Toys and PPHE HOTEL 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 Playmates Toys with a short position of PPHE HOTEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playmates Toys and PPHE HOTEL.

Diversification Opportunities for Playmates Toys and PPHE HOTEL

-0.27

Correlation Coefficient

Playmates Toys  PPHE HOTEL

Very good diversification

The 3 months correlation between Playmates and PPHE is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Playmates Toys Limited and PPHE HOTEL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPHE HOTEL GROUP and Playmates Toys 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 Playmates Toys Limited are associated (or correlated) with PPHE HOTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPHE HOTEL GROUP has no effect on the direction of Playmates Toys i.e., Playmates Toys and PPHE HOTEL go up and down completely randomly.

Pair Corralation between Playmates Toys and PPHE HOTEL

Assuming the 90 days horizon Playmates Toys Limited is expected to under-perform the PPHE HOTEL. In addition to that, Playmates Toys is 1.53 times more volatile than PPHE HOTEL GROUP. It trades about -0.01 of its total potential returns per unit of risk. PPHE HOTEL GROUP is currently generating about 0.22 per unit of volatility. If you would invest  1,400  in PPHE HOTEL GROUP on October 8, 2024 and sell it today you would earn a total of  310.00  from holding PPHE HOTEL GROUP or generate 22.14% return on investment over 90 days.

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

Playmates Toys Limited  vs.  PPHE HOTEL GROUP

Playmates Toys

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Playmates Toys Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Playmates Toys is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

PPHE HOTEL GROUP

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PPHE HOTEL GROUP are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, PPHE HOTEL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Playmates Toys and PPHE HOTEL

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

The idea behind Playmates Toys Limited and PPHE HOTEL GROUP 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.