Correlation Between Capri Holdings and PlayAGS

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

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

Diversification Opportunities for Capri Holdings and PlayAGS

-0.03

Correlation Coefficient

Capri Holdings  PlayAGS

Good diversification

The 3 months correlation between Capri and PlayAGS is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and PlayAGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PlayAGS and Capri Holdings 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 Capri Holdings are associated (or correlated) with PlayAGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PlayAGS has no effect on the direction of Capri Holdings i.e., Capri Holdings and PlayAGS go up and down completely randomly.

Pair Corralation between Capri Holdings and PlayAGS

Given the investment horizon of 90 days Capri Holdings is expected to generate 2.1 times less return on investment than PlayAGS. In addition to that, Capri Holdings is 10.65 times more volatile than PlayAGS. It trades about 0.01 of its total potential returns per unit of risk. PlayAGS is currently generating about 0.27 per unit of volatility. If you would invest  1,150  in PlayAGS on December 28, 2024 and sell it today you would earn a total of  62.00  from holding PlayAGS or generate 5.39% return on investment over 90 days.

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

Capri Holdings  vs.  PlayAGS

Capri Holdings

Risk-Adjusted Performance

Weak

Over the last 90 days Capri Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Capri Holdings is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

PlayAGS

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PlayAGS are ranked lower than 20 (%) 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.

Pair Trading with Capri Holdings and PlayAGS

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

The idea behind Capri Holdings and PlayAGS 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.