Correlation Between Beeks Trading and Playtech Plc

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

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

Diversification Opportunities for Beeks Trading and Playtech Plc

0.48

Correlation Coefficient

Beeks Trading  Playtech Plc

Very weak diversification

The 3 months correlation between Beeks and Playtech is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Beeks Trading and Playtech Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playtech Plc and Beeks Trading 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 Beeks Trading 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 has no effect on the direction of Beeks Trading i.e., Beeks Trading and Playtech Plc go up and down completely randomly.

Pair Corralation between Beeks Trading and Playtech Plc

Assuming the 90 days trading horizon Beeks Trading is expected to under-perform the Playtech Plc. In addition to that, Beeks Trading is 2.5 times more volatile than Playtech Plc. It trades about -0.02 of its total potential returns per unit of risk. Playtech Plc is currently generating about -0.02 per unit of volatility. If you would invest  73,900  in Playtech Plc on December 10, 2024 and sell it today you would lose (1,400) from holding Playtech Plc or give up 1.89% of portfolio value over 90 days.

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

Beeks Trading  vs.  Playtech Plc

Beeks Trading

Risk-Adjusted Performance

Very Weak

Over the last 90 days Beeks Trading has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Beeks Trading is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Playtech Plc

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Beeks Trading and Playtech Plc

The main advantage of trading using opposite Beeks Trading and Playtech Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beeks Trading 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 Beeks Trading and Playtech Plc 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.