Correlation Between International Consolidated and PLAYTECH

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

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

Diversification Opportunities for International Consolidated and PLAYTECH

0.43

Correlation Coefficient

International Consolidated  PLAYTECH

Very weak diversification

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

Pair Corralation between International Consolidated and PLAYTECH

Assuming the 90 days horizon International Consolidated Airlines is expected to under-perform the PLAYTECH. In addition to that, International Consolidated is 1.65 times more volatile than PLAYTECH. It trades about -0.03 of its total potential returns per unit of risk. PLAYTECH is currently generating about 0.05 per unit of volatility. If you would invest  845.00  in PLAYTECH on December 26, 2024 and sell it today you would earn a total of  36.00  from holding PLAYTECH or generate 4.26% return on investment over 90 days.

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

International Consolidated Air  vs.  PLAYTECH

International Consolidated

Risk-Adjusted Performance

Very Weak

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

PLAYTECH

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PLAYTECH are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, PLAYTECH is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with International Consolidated and PLAYTECH

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

The idea behind International Consolidated Airlines and PLAYTECH 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.