Correlation Between PlayAGS and Inspired Entertainment

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

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

Diversification Opportunities for PlayAGS and Inspired Entertainment

0.55

Correlation Coefficient

PlayAGS  Inspired Entertainment

Very weak diversification

The 3 months correlation between PlayAGS and Inspired is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding PlayAGS and Inspired Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inspired Entertainment and PlayAGS 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 PlayAGS are associated (or correlated) with Inspired Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inspired Entertainment has no effect on the direction of PlayAGS i.e., PlayAGS and Inspired Entertainment go up and down completely randomly.

Pair Corralation between PlayAGS and Inspired Entertainment

Considering the 90-day investment horizon PlayAGS is expected to generate 3.57 times less return on investment than Inspired Entertainment. But when comparing it to its historical volatility, PlayAGS is 9.56 times less risky than Inspired Entertainment. It trades about 0.19 of its potential returns per unit of risk. Inspired Entertainment is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  903.00  in Inspired Entertainment on August 30, 2024 and sell it today you would earn a total of  76.00  from holding Inspired Entertainment or generate 8.42% return on investment over 90 days.

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

PlayAGS  vs.  Inspired Entertainment

PlayAGS

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PlayAGS are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, PlayAGS is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Inspired Entertainment

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Inspired Entertainment are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Inspired Entertainment may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with PlayAGS and Inspired Entertainment

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

The idea behind PlayAGS and Inspired Entertainment 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.