Correlation Between Playstudios and LB Foster

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Can any of the company-specific risk be diversified away by investing in both Playstudios and LB Foster 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 LB Foster into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Playstudios and LB Foster, you can compare the effects of market volatilities on Playstudios and LB Foster 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 LB Foster. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playstudios and LB Foster.

Diversification Opportunities for Playstudios and LB Foster

0.93
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Playstudios and FSTR is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Playstudios and LB Foster in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LB Foster 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 LB Foster. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LB Foster has no effect on the direction of Playstudios i.e., Playstudios and LB Foster go up and down completely randomly.

Pair Corralation between Playstudios and LB Foster

Given the investment horizon of 90 days Playstudios is expected to generate 1.11 times less return on investment than LB Foster. In addition to that, Playstudios is 1.21 times more volatile than LB Foster. It trades about 0.19 of its total potential returns per unit of risk. LB Foster is currently generating about 0.25 per unit of volatility. If you would invest  1,962  in LB Foster on October 6, 2024 and sell it today you would earn a total of  789.00  from holding LB Foster or generate 40.21% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Playstudios  vs.  LB Foster

 Performance 
       Timeline  
Playstudios 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Playstudios are ranked lower than 10 (%) 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.
LB Foster 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in LB Foster are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, LB Foster reported solid returns over the last few months and may actually be approaching a breakup point.

Playstudios and LB Foster Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Playstudios and LB Foster

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

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