Correlation Between PlayAGS and Playtech PLC

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

By analyzing existing cross correlation between PlayAGS and Playtech PLC ADR, you can compare the effects of market volatilities on PlayAGS and Playtech PLC 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 Playtech PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of PlayAGS and Playtech PLC.

Diversification Opportunities for PlayAGS and Playtech PLC

0.65

Correlation Coefficient

PlayAGS  Playtech PLC

Poor diversification

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

Pair Corralation between PlayAGS and Playtech PLC

Considering the 90-day investment horizon PlayAGS is expected to generate 1.72 times less return on investment than Playtech PLC. But when comparing it to its historical volatility, PlayAGS is 1.23 times less risky than Playtech PLC. It trades about 0.16 of its potential returns per unit of risk. Playtech PLC ADR is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,679  in Playtech PLC ADR on October 9, 2024 and sell it today you would earn a total of  32.00  from holding Playtech PLC ADR or generate 1.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.0%
Values	Daily Returns

PlayAGS  vs.  Playtech PLC ADR

PlayAGS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PlayAGS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, PlayAGS is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Playtech PLC ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Playtech PLC ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with PlayAGS and Playtech PLC

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

The idea behind PlayAGS and Playtech PLC ADR 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 Anywhere module to track or share privately all of your investments from the convenience of any device.