Correlation Between Playstudios and Square Enix

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

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

Diversification Opportunities for Playstudios and Square Enix

0.18

Correlation Coefficient

Playstudios  Square Enix

Average diversification

The 3 months correlation between Playstudios and Square is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Playstudios and Square Enix Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Square Enix Holdings and Playstudios 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 Playstudios are associated (or correlated) with Square Enix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Square Enix Holdings has no effect on the direction of Playstudios i.e., Playstudios and Square Enix go up and down completely randomly.

Pair Corralation between Playstudios and Square Enix

Given the investment horizon of 90 days Playstudios is expected to generate 1.12 times more return on investment than Square Enix. However, Playstudios is 1.12 times more volatile than Square Enix Holdings. It trades about 0.14 of its potential returns per unit of risk. Square Enix Holdings is currently generating about 0.05 per unit of risk. If you would invest  147.00  in Playstudios on September 4, 2024 and sell it today you would earn a total of  46.00  from holding Playstudios or generate 31.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Playstudios  vs.  Square Enix Holdings

Playstudios

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Playstudios are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Playstudios unveiled solid returns over the last few months and may actually be approaching a breakup point.

Square Enix Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Square Enix Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Square Enix may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Playstudios and Square Enix

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

The idea behind Playstudios and Square Enix Holdings 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.