Correlation Between Plby and Shimano

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

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

Diversification Opportunities for Plby and Shimano

-0.48

Correlation Coefficient

Plby  Shimano

Very good diversification

The 3 months correlation between Plby and Shimano is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Plby Group and Shimano in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shimano and Plby 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 Plby Group are associated (or correlated) with Shimano. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shimano has no effect on the direction of Plby i.e., Plby and Shimano go up and down completely randomly.

Pair Corralation between Plby and Shimano

Given the investment horizon of 90 days Plby Group is expected to generate 3.53 times more return on investment than Shimano. However, Plby is 3.53 times more volatile than Shimano. It trades about 0.06 of its potential returns per unit of risk. Shimano is currently generating about 0.0 per unit of risk. If you would invest  140.00  in Plby Group on December 3, 2024 and sell it today you would earn a total of  15.00  from holding Plby Group or generate 10.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	72.13%
Values	Daily Returns

Plby Group  vs.  Shimano

Plby Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Plby Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental drivers, Plby showed solid returns over the last few months and may actually be approaching a breakup point.

Shimano

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shimano has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Shimano is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Plby and Shimano

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

The idea behind Plby Group and Shimano 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .