Correlation Between PLAYWAY SA and Aristocrat Leisure

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

By analyzing existing cross correlation between PLAYWAY SA ZY 10 and Aristocrat Leisure Limited, you can compare the effects of market volatilities on PLAYWAY SA and Aristocrat Leisure 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 PLAYWAY SA with a short position of Aristocrat Leisure. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLAYWAY SA and Aristocrat Leisure.

Diversification Opportunities for PLAYWAY SA and Aristocrat Leisure

-0.24

Correlation Coefficient

PLAYWAY SA  Aristocrat Leisure

Very good diversification

The 3 months correlation between PLAYWAY and Aristocrat is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding PLAYWAY SA ZY 10 and Aristocrat Leisure Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aristocrat Leisure and PLAYWAY SA 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 PLAYWAY SA ZY 10 are associated (or correlated) with Aristocrat Leisure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aristocrat Leisure has no effect on the direction of PLAYWAY SA i.e., PLAYWAY SA and Aristocrat Leisure go up and down completely randomly.

Pair Corralation between PLAYWAY SA and Aristocrat Leisure

Assuming the 90 days horizon PLAYWAY SA ZY 10 is expected to generate 1.76 times more return on investment than Aristocrat Leisure. However, PLAYWAY SA is 1.76 times more volatile than Aristocrat Leisure Limited. It trades about 0.14 of its potential returns per unit of risk. Aristocrat Leisure Limited is currently generating about 0.03 per unit of risk. If you would invest  6,210  in PLAYWAY SA ZY 10 on October 9, 2024 and sell it today you would earn a total of  280.00  from holding PLAYWAY SA ZY 10 or generate 4.51% return on investment over 90 days.

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

PLAYWAY SA ZY 10  vs.  Aristocrat Leisure Limited

PLAYWAY SA ZY

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PLAYWAY SA ZY 10 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, PLAYWAY SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Aristocrat Leisure

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aristocrat Leisure Limited are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Aristocrat Leisure reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PLAYWAY SA and Aristocrat Leisure

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

The idea behind PLAYWAY SA ZY 10 and Aristocrat Leisure Limited 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.