Correlation Between PLAYMATES TOYS and Teva Pharmaceutical

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

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

Diversification Opportunities for PLAYMATES TOYS and Teva Pharmaceutical

0.0

Correlation Coefficient

PLAYMATES TOYS  Teva Pharmaceutical

Pay attention - limited upside

The 3 months correlation between PLAYMATES and Teva is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding PLAYMATES TOYS and Teva Pharmaceutical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teva Pharmaceutical 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 Teva Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teva Pharmaceutical has no effect on the direction of PLAYMATES TOYS i.e., PLAYMATES TOYS and Teva Pharmaceutical go up and down completely randomly.

Pair Corralation between PLAYMATES TOYS and Teva Pharmaceutical

If you would invest  7.15  in PLAYMATES TOYS on December 24, 2024 and sell it today you would lose (0.35) from holding PLAYMATES TOYS or give up 4.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

PLAYMATES TOYS  vs.  Teva Pharmaceutical Industries

PLAYMATES TOYS

Risk-Adjusted Performance

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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Teva Pharmaceutical

Risk-Adjusted Performance

Very Weak

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

Pair Trading with PLAYMATES TOYS and Teva Pharmaceutical

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

The idea behind PLAYMATES TOYS and Teva Pharmaceutical Industries 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.