Correlation Between ADHI KARYA and PLAYMATES TOYS

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

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

Diversification Opportunities for ADHI KARYA and PLAYMATES TOYS

-0.05

Correlation Coefficient

ADHI KARYA  PLAYMATES TOYS

Good diversification

The 3 months correlation between ADHI and PLAYMATES is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding ADHI KARYA and PLAYMATES TOYS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLAYMATES TOYS and ADHI KARYA 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 ADHI KARYA 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 ADHI KARYA i.e., ADHI KARYA and PLAYMATES TOYS go up and down completely randomly.

Pair Corralation between ADHI KARYA and PLAYMATES TOYS

Assuming the 90 days trading horizon ADHI KARYA is expected to generate 6.44 times more return on investment than PLAYMATES TOYS. However, ADHI KARYA is 6.44 times more volatile than PLAYMATES TOYS. It trades about 0.08 of its potential returns per unit of risk. PLAYMATES TOYS is currently generating about 0.0 per unit of risk. If you would invest  0.85  in ADHI KARYA on December 24, 2024 and sell it today you would lose (0.35) from holding ADHI KARYA or give up 41.18% of portfolio value over 90 days.

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

ADHI KARYA  vs.  PLAYMATES TOYS

ADHI KARYA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ADHI KARYA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, ADHI KARYA unveiled solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with ADHI KARYA and PLAYMATES TOYS

The main advantage of trading using opposite ADHI KARYA and PLAYMATES TOYS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADHI KARYA 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 ADHI KARYA 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.