Correlation Between Playmates Toys and Evolution Mining

Can any of the company-specific risk be diversified away by investing in both Playmates Toys and Evolution Mining 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 Evolution Mining 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 Evolution Mining Limited, you can compare the effects of market volatilities on Playmates Toys and Evolution Mining 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 Evolution Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playmates Toys and Evolution Mining.

Diversification Opportunities for Playmates Toys and Evolution Mining

0.26

Correlation Coefficient

Playmates Toys  Evolution Mining

Modest diversification

The 3 months correlation between Playmates and Evolution is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Playmates Toys Limited and Evolution Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Mining 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 Evolution Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution Mining has no effect on the direction of Playmates Toys i.e., Playmates Toys and Evolution Mining go up and down completely randomly.

Pair Corralation between Playmates Toys and Evolution Mining

Assuming the 90 days horizon Playmates Toys is expected to generate 1.37 times less return on investment than Evolution Mining. In addition to that, Playmates Toys is 3.66 times more volatile than Evolution Mining Limited. It trades about 0.04 of its total potential returns per unit of risk. Evolution Mining Limited is currently generating about 0.19 per unit of volatility. If you would invest  303.00  in Evolution Mining Limited on October 25, 2024 and sell it today you would earn a total of  46.00  from holding Evolution Mining Limited or generate 15.18% return on investment over 90 days.

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

Playmates Toys Limited  vs.  Evolution Mining Limited

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.

Evolution Mining

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Evolution Mining Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Evolution Mining may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Playmates Toys and Evolution Mining

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

The idea behind Playmates Toys Limited and Evolution Mining Limited 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.