Correlation Between X Legend and PlayNitride

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

By analyzing existing cross correlation between X Legend Entertainment Co and PlayNitride, you can compare the effects of market volatilities on X Legend and PlayNitride 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 X Legend with a short position of PlayNitride. Check out your portfolio center. Please also check ongoing floating volatility patterns of X Legend and PlayNitride.

Diversification Opportunities for X Legend and PlayNitride

-0.42

Correlation Coefficient

X Legend  PlayNitride

Very good diversification

The 3 months correlation between 4994 and PlayNitride is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding X Legend Entertainment Co and PlayNitride in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PlayNitride and X Legend 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 X Legend Entertainment Co are associated (or correlated) with PlayNitride. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PlayNitride has no effect on the direction of X Legend i.e., X Legend and PlayNitride go up and down completely randomly.

Pair Corralation between X Legend and PlayNitride

Assuming the 90 days trading horizon X Legend Entertainment Co is expected to generate 1.35 times more return on investment than PlayNitride. However, X Legend is 1.35 times more volatile than PlayNitride. It trades about 0.06 of its potential returns per unit of risk. PlayNitride is currently generating about 0.07 per unit of risk. If you would invest  4,915  in X Legend Entertainment Co on October 22, 2024 and sell it today you would earn a total of  5,135  from holding X Legend Entertainment Co or generate 104.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.74%
Values	Daily Returns

X Legend Entertainment Co  vs.  PlayNitride

X Legend Entertainment

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days X Legend Entertainment Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, X Legend is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

PlayNitride

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PlayNitride are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, PlayNitride showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with X Legend and PlayNitride

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

The idea behind X Legend Entertainment Co and PlayNitride 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.