Correlation Between Play2Chill and Live Motion

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Can any of the company-specific risk be diversified away by investing in both Play2Chill and Live Motion 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 Play2Chill and Live Motion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Play2Chill SA and Live Motion Games, you can compare the effects of market volatilities on Play2Chill and Live Motion 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 Play2Chill with a short position of Live Motion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Play2Chill and Live Motion.

Diversification Opportunities for Play2Chill and Live Motion

Play2ChillLiveDiversified AwayPlay2ChillLiveDiversified Away100%
0.24
  Correlation Coefficient

Modest diversification

The 3 months correlation between Play2Chill and Live is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Play2Chill SA and Live Motion Games in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Live Motion Games and Play2Chill 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 Play2Chill SA are associated (or correlated) with Live Motion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Live Motion Games has no effect on the direction of Play2Chill i.e., Play2Chill and Live Motion go up and down completely randomly.

Pair Corralation between Play2Chill and Live Motion

Assuming the 90 days trading horizon Play2Chill SA is expected to under-perform the Live Motion. But the stock apears to be less risky and, when comparing its historical volatility, Play2Chill SA is 1.75 times less risky than Live Motion. The stock trades about -0.12 of its potential returns per unit of risk. The Live Motion Games is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  133.00  in Live Motion Games on November 21, 2024 and sell it today you would lose (28.00) from holding Live Motion Games or give up 21.05% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Play2Chill SA  vs.  Live Motion Games

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -40-30-20-1001020
JavaScript chart by amCharts 3.21.15P2C LMG
       Timeline  
Play2Chill SA 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Play2Chill SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in March 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb33.544.5
Live Motion Games 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Live Motion Games has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in March 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.80.911.11.21.31.41.5

Play2Chill and Live Motion Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.92-4.44-2.95-1.46-0.02231.292.633.975.316.65 0.0100.0150.0200.0250.030
JavaScript chart by amCharts 3.21.15P2C LMG
       Returns  

Pair Trading with Play2Chill and Live Motion

The main advantage of trading using opposite Play2Chill and Live Motion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Play2Chill position performs unexpectedly, Live Motion 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 Live Motion will offset losses from the drop in Live Motion's long position.
The idea behind Play2Chill SA and Live Motion Games 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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