Correlation Between PLAYWAY SA and SOFTWARE MANSION

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

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

Diversification Opportunities for PLAYWAY SA and SOFTWARE MANSION

0.28

Correlation Coefficient

PLAYWAY SA  SOFTWARE MANSION

Modest diversification

The 3 months correlation between PLAYWAY and SOFTWARE is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding PLAYWAY SA and SOFTWARE MANSION SPOLKA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOFTWARE MANSION SPOLKA and PLAYWAY SA 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 PLAYWAY SA are associated (or correlated) with SOFTWARE MANSION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOFTWARE MANSION SPOLKA has no effect on the direction of PLAYWAY SA i.e., PLAYWAY SA and SOFTWARE MANSION go up and down completely randomly.

Pair Corralation between PLAYWAY SA and SOFTWARE MANSION

Assuming the 90 days trading horizon PLAYWAY SA is expected to under-perform the SOFTWARE MANSION. But the stock apears to be less risky and, when comparing its historical volatility, PLAYWAY SA is 1.73 times less risky than SOFTWARE MANSION. The stock trades about -0.05 of its potential returns per unit of risk. The SOFTWARE MANSION SPOLKA is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  3,170  in SOFTWARE MANSION SPOLKA on September 4, 2024 and sell it today you would lose (120.00) from holding SOFTWARE MANSION SPOLKA or give up 3.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.65%
Values	Daily Returns

PLAYWAY SA  vs.  SOFTWARE MANSION SPOLKA

PLAYWAY SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PLAYWAY SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, PLAYWAY SA is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

SOFTWARE MANSION SPOLKA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SOFTWARE MANSION SPOLKA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, SOFTWARE MANSION is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with PLAYWAY SA and SOFTWARE MANSION

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

The idea behind PLAYWAY SA and SOFTWARE MANSION SPOLKA 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.