Correlation Between DAIDO METAL and PLAYMATES TOYS

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

By analyzing existing cross correlation between DAIDO METAL TD and PLAYMATES TOYS, you can compare the effects of market volatilities on DAIDO METAL and PLAYMATES TOYS 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 DAIDO METAL with a short position of PLAYMATES TOYS. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAIDO METAL and PLAYMATES TOYS.

Diversification Opportunities for DAIDO METAL and PLAYMATES TOYS

-0.12

Correlation Coefficient

DAIDO METAL  PLAYMATES TOYS

Good diversification

The 3 months correlation between DAIDO and PLAYMATES is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding DAIDO METAL TD and PLAYMATES TOYS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLAYMATES TOYS and DAIDO METAL 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 DAIDO METAL TD are associated (or correlated) with PLAYMATES TOYS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLAYMATES TOYS has no effect on the direction of DAIDO METAL i.e., DAIDO METAL and PLAYMATES TOYS go up and down completely randomly.

Pair Corralation between DAIDO METAL and PLAYMATES TOYS

Assuming the 90 days horizon DAIDO METAL TD is expected to generate 1.38 times more return on investment than PLAYMATES TOYS. However, DAIDO METAL is 1.38 times more volatile than PLAYMATES TOYS. It trades about 0.06 of its potential returns per unit of risk. PLAYMATES TOYS is currently generating about 0.08 per unit of risk. If you would invest  67.00  in DAIDO METAL TD on October 25, 2024 and sell it today you would earn a total of  221.00  from holding DAIDO METAL TD or generate 329.85% return on investment over 90 days.

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

DAIDO METAL TD  vs.  PLAYMATES TOYS

DAIDO METAL TD

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DAIDO METAL TD are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, DAIDO METAL is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

PLAYMATES TOYS

Risk-Adjusted Performance

0 of 100

Very 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.

Pair Trading with DAIDO METAL and PLAYMATES TOYS

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

The idea behind DAIDO METAL TD and PLAYMATES TOYS 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.