Correlation Between PLAYMATES TOYS and BANK CIMB

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

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

Diversification Opportunities for PLAYMATES TOYS and BANK CIMB

0.46

Correlation Coefficient

PLAYMATES TOYS  BANK CIMB

Very weak diversification

The 3 months correlation between PLAYMATES and BANK is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding PLAYMATES TOYS and BANK CIMB NIAGA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK CIMB NIAGA 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 BANK CIMB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK CIMB NIAGA has no effect on the direction of PLAYMATES TOYS i.e., PLAYMATES TOYS and BANK CIMB go up and down completely randomly.

Pair Corralation between PLAYMATES TOYS and BANK CIMB

Assuming the 90 days trading horizon PLAYMATES TOYS is expected to generate 2.19 times more return on investment than BANK CIMB. However, PLAYMATES TOYS is 2.19 times more volatile than BANK CIMB NIAGA. It trades about 0.06 of its potential returns per unit of risk. BANK CIMB NIAGA is currently generating about -0.15 per unit of risk. If you would invest  6.40  in PLAYMATES TOYS on October 9, 2024 and sell it today you would earn a total of  0.20  from holding PLAYMATES TOYS or generate 3.13% return on investment over 90 days.

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

PLAYMATES TOYS  vs.  BANK CIMB NIAGA

PLAYMATES TOYS

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days PLAYMATES TOYS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, PLAYMATES TOYS is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

BANK CIMB NIAGA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BANK CIMB NIAGA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, BANK CIMB is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with PLAYMATES TOYS and BANK CIMB

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

The idea behind PLAYMATES TOYS and BANK CIMB NIAGA 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.