Correlation Between Play2Chill and NGG

Can any of the company-specific risk be diversified away by investing in both Play2Chill and NGG 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 Play2Chill and NGG into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Play2Chill SA and NGG, you can compare the effects of market volatilities on Play2Chill and NGG 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 Play2Chill with a short position of NGG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Play2Chill and NGG.

Diversification Opportunities for Play2Chill and NGG

-0.02

Correlation Coefficient

Play2Chill  NGG

Good diversification

The 3 months correlation between Play2Chill and NGG is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Play2Chill SA and NGG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NGG and Play2Chill 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 Play2Chill SA are associated (or correlated) with NGG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NGG has no effect on the direction of Play2Chill i.e., Play2Chill and NGG go up and down completely randomly.

Pair Corralation between Play2Chill and NGG

Assuming the 90 days trading horizon Play2Chill SA is expected to generate 0.86 times more return on investment than NGG. However, Play2Chill SA is 1.16 times less risky than NGG. It trades about 0.0 of its potential returns per unit of risk. NGG is currently generating about -0.05 per unit of risk. If you would invest  587.00  in Play2Chill SA on September 1, 2024 and sell it today you would lose (137.00) from holding Play2Chill SA or give up 23.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.49%
Values	Daily Returns

Play2Chill SA  vs.  NGG

Play2Chill SA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Play2Chill SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Play2Chill reported solid returns over the last few months and may actually be approaching a breakup point.

NGG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NGG has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Play2Chill and NGG

The main advantage of trading using opposite Play2Chill and NGG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Play2Chill position performs unexpectedly, NGG 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 NGG will offset losses from the drop in NGG's long position.

The idea behind Play2Chill SA and NGG 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.