Correlation Between Playstudios and Boston Beer

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

By analyzing existing cross correlation between Playstudios and Boston Beer, you can compare the effects of market volatilities on Playstudios and Boston Beer 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 Boston Beer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playstudios and Boston Beer.

Diversification Opportunities for Playstudios and Boston Beer

0.57

Correlation Coefficient

Playstudios  Boston Beer

Very weak diversification

The 3 months correlation between Playstudios and Boston is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Playstudios and Boston Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Beer 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 Boston Beer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Beer has no effect on the direction of Playstudios i.e., Playstudios and Boston Beer go up and down completely randomly.

Pair Corralation between Playstudios and Boston Beer

Given the investment horizon of 90 days Playstudios is expected to generate 1.51 times more return on investment than Boston Beer. However, Playstudios is 1.51 times more volatile than Boston Beer. It trades about -0.01 of its potential returns per unit of risk. Boston Beer is currently generating about -0.03 per unit of risk. If you would invest  231.00  in Playstudios on October 9, 2024 and sell it today you would lose (53.00) from holding Playstudios or give up 22.94% of portfolio value over 90 days.

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

Playstudios  vs.  Boston Beer

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.

Boston Beer

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Beer are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Boston Beer may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Playstudios and Boston Beer

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

The idea behind Playstudios and Boston Beer 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.