Correlation Between PLAYWAY SA and FEMALE HEALTH

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

By analyzing existing cross correlation between PLAYWAY SA ZY 10 and FEMALE HEALTH, you can compare the effects of market volatilities on PLAYWAY SA and FEMALE HEALTH 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 FEMALE HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLAYWAY SA and FEMALE HEALTH.

Diversification Opportunities for PLAYWAY SA and FEMALE HEALTH

0.08

Correlation Coefficient

PLAYWAY SA  FEMALE HEALTH

Significant diversification

The 3 months correlation between PLAYWAY and FEMALE is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding PLAYWAY SA ZY 10 and FEMALE HEALTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FEMALE HEALTH 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 ZY 10 are associated (or correlated) with FEMALE HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FEMALE HEALTH has no effect on the direction of PLAYWAY SA i.e., PLAYWAY SA and FEMALE HEALTH go up and down completely randomly.

Pair Corralation between PLAYWAY SA and FEMALE HEALTH

Assuming the 90 days horizon PLAYWAY SA ZY 10 is expected to generate 0.52 times more return on investment than FEMALE HEALTH. However, PLAYWAY SA ZY 10 is 1.92 times less risky than FEMALE HEALTH. It trades about -0.04 of its potential returns per unit of risk. FEMALE HEALTH is currently generating about -0.06 per unit of risk. If you would invest  6,610  in PLAYWAY SA ZY 10 on September 4, 2024 and sell it today you would lose (400.00) from holding PLAYWAY SA ZY 10 or give up 6.05% of portfolio value over 90 days.

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

PLAYWAY SA ZY 10  vs.  FEMALE HEALTH

PLAYWAY SA ZY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PLAYWAY SA ZY 10 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PLAYWAY SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

FEMALE HEALTH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FEMALE HEALTH has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with PLAYWAY SA and FEMALE HEALTH

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

The idea behind PLAYWAY SA ZY 10 and FEMALE HEALTH 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.