Correlation Between Gaming and PLAYTECH

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

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

Diversification Opportunities for Gaming and PLAYTECH

0.65

Correlation Coefficient

Gaming  PLAYTECH

Poor diversification

The 3 months correlation between Gaming and PLAYTECH is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Gaming and Leisure and PLAYTECH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLAYTECH and Gaming 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 Gaming and Leisure are associated (or correlated) with PLAYTECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLAYTECH has no effect on the direction of Gaming i.e., Gaming and PLAYTECH go up and down completely randomly.

Pair Corralation between Gaming and PLAYTECH

Assuming the 90 days horizon Gaming and Leisure is expected to generate 0.89 times more return on investment than PLAYTECH. However, Gaming and Leisure is 1.12 times less risky than PLAYTECH. It trades about 0.07 of its potential returns per unit of risk. PLAYTECH is currently generating about 0.05 per unit of risk. If you would invest  4,425  in Gaming and Leisure on December 23, 2024 and sell it today you would earn a total of  231.00  from holding Gaming and Leisure or generate 5.22% return on investment over 90 days.

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

Gaming and Leisure  vs.  PLAYTECH

Gaming and Leisure

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gaming and Leisure are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Gaming is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

PLAYTECH

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PLAYTECH are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, PLAYTECH is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Gaming and PLAYTECH

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

The idea behind Gaming and Leisure and PLAYTECH 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.