Correlation Between Plby and Yamaha Corp

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

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

Diversification Opportunities for Plby and Yamaha Corp

-0.78

Correlation Coefficient

Plby  Yamaha Corp

Pay attention - limited upside

The 3 months correlation between Plby and Yamaha is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Plby Group and Yamaha Corp DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yamaha Corp DRC 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 Yamaha Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yamaha Corp DRC has no effect on the direction of Plby i.e., Plby and Yamaha Corp go up and down completely randomly.

Pair Corralation between Plby and Yamaha Corp

Given the investment horizon of 90 days Plby Group is expected to generate 4.0 times more return on investment than Yamaha Corp. However, Plby is 4.0 times more volatile than Yamaha Corp DRC. It trades about 0.21 of its potential returns per unit of risk. Yamaha Corp DRC is currently generating about -0.12 per unit of risk. If you would invest  54.00  in Plby Group on August 31, 2024 and sell it today you would earn a total of  75.00  from holding Plby Group or generate 138.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Plby Group  vs.  Yamaha Corp DRC

Plby Group

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Plby Group are ranked lower than 16 (%) 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.

Yamaha Corp DRC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yamaha Corp DRC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Plby and Yamaha Corp

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

The idea behind Plby Group and Yamaha Corp DRC 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.

Check out your portfolio center.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.