Correlation Between Gambling and Playmaker Capital

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

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

Diversification Opportunities for Gambling and Playmaker Capital

0.05

Correlation Coefficient

Gambling  Playmaker Capital

Significant diversification

The 3 months correlation between Gambling and Playmaker is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Gambling Group and Playmaker Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playmaker Capital and Gambling 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 Gambling Group are associated (or correlated) with Playmaker Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playmaker Capital has no effect on the direction of Gambling i.e., Gambling and Playmaker Capital go up and down completely randomly.

Pair Corralation between Gambling and Playmaker Capital

Given the investment horizon of 90 days Gambling Group is expected to generate 1.1 times more return on investment than Playmaker Capital. However, Gambling is 1.1 times more volatile than Playmaker Capital. It trades about 0.05 of its potential returns per unit of risk. Playmaker Capital is currently generating about 0.01 per unit of risk. If you would invest  915.00  in Gambling Group on September 20, 2024 and sell it today you would earn a total of  581.00  from holding Gambling Group or generate 63.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	28.23%
Values	Daily Returns

Gambling Group  vs.  Playmaker Capital

Gambling Group

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gambling Group are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating primary indicators, Gambling sustained solid returns over the last few months and may actually be approaching a breakup point.

Playmaker Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Playmaker Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Playmaker Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Gambling and Playmaker Capital

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

The idea behind Gambling Group and Playmaker Capital 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.