Correlation Between EI Du and Playstudios

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

By analyzing existing cross correlation between EI du Pont and Playstudios, you can compare the effects of market volatilities on EI Du and Playstudios 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 EI Du with a short position of Playstudios. Check out your portfolio center. Please also check ongoing floating volatility patterns of EI Du and Playstudios.

Diversification Opportunities for EI Du and Playstudios

0.24

Correlation Coefficient

EI Du  Playstudios

Modest diversification

The 3 months correlation between CTA-P-A and Playstudios is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding EI du Pont and Playstudios in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playstudios and EI Du 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 EI du Pont are associated (or correlated) with Playstudios. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playstudios has no effect on the direction of EI Du i.e., EI Du and Playstudios go up and down completely randomly.

Pair Corralation between EI Du and Playstudios

Assuming the 90 days trading horizon EI du Pont is expected to under-perform the Playstudios. But the preferred stock apears to be less risky and, when comparing its historical volatility, EI du Pont is 2.66 times less risky than Playstudios. The preferred stock trades about -0.11 of its potential returns per unit of risk. The Playstudios is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  155.00  in Playstudios on October 9, 2024 and sell it today you would earn a total of  31.00  from holding Playstudios or generate 20.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	75.0%
Values	Daily Returns

EI du Pont  vs.  Playstudios

EI du Pont

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EI du Pont has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Preferred Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Playstudios

Risk-Adjusted Performance

8 of 100

OK

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

Pair Trading with EI Du and Playstudios

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

The idea behind EI du Pont and Playstudios 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.