Correlation Between Playstudios and CleanGo Innovations

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

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

Diversification Opportunities for Playstudios and CleanGo Innovations

0.68

Correlation Coefficient

Playstudios  CleanGo Innovations

Poor diversification

The 3 months correlation between Playstudios and CleanGo is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Playstudios and CleanGo Innovations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CleanGo Innovations and Playstudios 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 Playstudios are associated (or correlated) with CleanGo Innovations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CleanGo Innovations has no effect on the direction of Playstudios i.e., Playstudios and CleanGo Innovations go up and down completely randomly.

Pair Corralation between Playstudios and CleanGo Innovations

Given the investment horizon of 90 days Playstudios is expected to under-perform the CleanGo Innovations. But the stock apears to be less risky and, when comparing its historical volatility, Playstudios is 3.12 times less risky than CleanGo Innovations. The stock trades about -0.01 of its potential returns per unit of risk. The CleanGo Innovations is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  39.00  in CleanGo Innovations on October 9, 2024 and sell it today you would lose (7.00) from holding CleanGo Innovations or give up 17.95% of portfolio value over 90 days.

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

Playstudios  vs.  CleanGo Innovations

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.

CleanGo Innovations

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CleanGo Innovations are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, CleanGo Innovations reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Playstudios and CleanGo Innovations

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

The idea behind Playstudios and CleanGo Innovations 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.