Correlation Between PlayAGS and Red Rock

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

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

Diversification Opportunities for PlayAGS and Red Rock

0.43

Correlation Coefficient

PlayAGS  Red Rock

Very weak diversification

The 3 months correlation between PlayAGS and Red is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding PlayAGS and Red Rock Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Rock Resorts 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 Red Rock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Rock Resorts has no effect on the direction of PlayAGS i.e., PlayAGS and Red Rock go up and down completely randomly.

Pair Corralation between PlayAGS and Red Rock

Considering the 90-day investment horizon PlayAGS is expected to generate 0.17 times more return on investment than Red Rock. However, PlayAGS is 5.8 times less risky than Red Rock. It trades about 0.27 of its potential returns per unit of risk. Red Rock Resorts is currently generating about -0.02 per unit of risk. If you would invest  1,150  in PlayAGS on December 28, 2024 and sell it today you would earn a total of  63.00  from holding PlayAGS or generate 5.48% return on investment over 90 days.

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

PlayAGS  vs.  Red Rock Resorts

PlayAGS

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PlayAGS are ranked lower than 21 (%) 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.

Red Rock Resorts

Risk-Adjusted Performance

Very Weak

Over the last 90 days Red Rock Resorts has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Red Rock is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with PlayAGS and Red Rock

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

The idea behind PlayAGS and Red Rock Resorts 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.