Correlation Between PLAYMATES TOYS and Apple

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

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

Diversification Opportunities for PLAYMATES TOYS and Apple

-0.01

Correlation Coefficient

PLAYMATES TOYS  Apple

Good diversification

The 3 months correlation between PLAYMATES and Apple is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding PLAYMATES TOYS and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of PLAYMATES TOYS i.e., PLAYMATES TOYS and Apple go up and down completely randomly.

Pair Corralation between PLAYMATES TOYS and Apple

Assuming the 90 days trading horizon PLAYMATES TOYS is expected to generate 2.08 times less return on investment than Apple. In addition to that, PLAYMATES TOYS is 2.97 times more volatile than Apple Inc. It trades about 0.04 of its total potential returns per unit of risk. Apple Inc is currently generating about 0.23 per unit of volatility. If you would invest  19,353  in Apple Inc on September 14, 2024 and sell it today you would earn a total of  4,267  from holding Apple Inc or generate 22.05% return on investment over 90 days.

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

PLAYMATES TOYS  vs.  Apple Inc

PLAYMATES TOYS

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PLAYMATES TOYS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, PLAYMATES TOYS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Apple Inc

Risk-Adjusted Performance

18 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Apple exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PLAYMATES TOYS and Apple

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

The idea behind PLAYMATES TOYS and Apple Inc 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.