Correlation Between PLAYMATES TOYS and AEON STORES

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

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

Diversification Opportunities for PLAYMATES TOYS and AEON STORES

-0.12

Correlation Coefficient

PLAYMATES TOYS  AEON STORES

Good diversification

The 3 months correlation between PLAYMATES and AEON is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding PLAYMATES TOYS and AEON STORES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEON STORES and PLAYMATES TOYS 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 PLAYMATES TOYS are associated (or correlated) with AEON STORES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AEON STORES has no effect on the direction of PLAYMATES TOYS i.e., PLAYMATES TOYS and AEON STORES go up and down completely randomly.

Pair Corralation between PLAYMATES TOYS and AEON STORES

Assuming the 90 days trading horizon PLAYMATES TOYS is expected to generate 9.59 times more return on investment than AEON STORES. However, PLAYMATES TOYS is 9.59 times more volatile than AEON STORES. It trades about 0.08 of its potential returns per unit of risk. AEON STORES is currently generating about -0.17 per unit of risk. If you would invest  4.81  in PLAYMATES TOYS on September 30, 2024 and sell it today you would earn a total of  2.34  from holding PLAYMATES TOYS or generate 48.65% return on investment over 90 days.

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

PLAYMATES TOYS  vs.  AEON STORES

PLAYMATES TOYS

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PLAYMATES TOYS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, PLAYMATES TOYS unveiled solid returns over the last few months and may actually be approaching a breakup point.

AEON STORES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AEON STORES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with PLAYMATES TOYS and AEON STORES

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

The idea behind PLAYMATES TOYS and AEON STORES 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.