Correlation Between RETAIL FOOD and Playtech Plc

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

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

Diversification Opportunities for RETAIL FOOD and Playtech Plc

-0.14

Correlation Coefficient

RETAIL FOOD  Playtech Plc

Good diversification

The 3 months correlation between RETAIL and Playtech is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding RETAIL FOOD GROUP and Playtech plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playtech plc and RETAIL FOOD 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 RETAIL FOOD GROUP 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 RETAIL FOOD i.e., RETAIL FOOD and Playtech Plc go up and down completely randomly.

Pair Corralation between RETAIL FOOD and Playtech Plc

Assuming the 90 days trading horizon RETAIL FOOD GROUP is expected to under-perform the Playtech Plc. In addition to that, RETAIL FOOD is 3.26 times more volatile than Playtech plc. It trades about -0.16 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  860.00  in Playtech plc on December 2, 2024 and sell it today you would earn a total of  11.00  from holding Playtech plc or generate 1.28% return on investment over 90 days.

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

RETAIL FOOD GROUP  vs.  Playtech plc

RETAIL FOOD GROUP

Risk-Adjusted Performance

Very Weak

Over the last 90 days RETAIL FOOD GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Playtech plc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Playtech plc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Playtech Plc 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 RETAIL FOOD and Playtech Plc

The main advantage of trading using opposite RETAIL FOOD and Playtech Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RETAIL FOOD 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 RETAIL FOOD GROUP 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.