Correlation Between TRADEGATE and PLAYMATES TOYS

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

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

Diversification Opportunities for TRADEGATE and PLAYMATES TOYS

-0.52

Correlation Coefficient

TRADEGATE  PLAYMATES TOYS

Excellent diversification

The 3 months correlation between TRADEGATE and PLAYMATES is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding TRADEGATE and PLAYMATES TOYS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLAYMATES TOYS and TRADEGATE 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 TRADEGATE are associated (or correlated) with PLAYMATES TOYS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLAYMATES TOYS has no effect on the direction of TRADEGATE i.e., TRADEGATE and PLAYMATES TOYS go up and down completely randomly.

Pair Corralation between TRADEGATE and PLAYMATES TOYS

Assuming the 90 days trading horizon TRADEGATE is expected to generate 0.07 times more return on investment than PLAYMATES TOYS. However, TRADEGATE is 13.65 times less risky than PLAYMATES TOYS. It trades about -0.14 of its potential returns per unit of risk. PLAYMATES TOYS is currently generating about -0.16 per unit of risk. If you would invest  9,050  in TRADEGATE on October 5, 2024 and sell it today you would lose (50.00) from holding TRADEGATE or give up 0.55% of portfolio value over 90 days.

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

TRADEGATE  vs.  PLAYMATES TOYS

TRADEGATE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TRADEGATE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, TRADEGATE is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

PLAYMATES TOYS

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days PLAYMATES TOYS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with TRADEGATE and PLAYMATES TOYS

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

The idea behind TRADEGATE and PLAYMATES TOYS 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.