Correlation Between Light Wonder and Playtech Plc

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Light Wonder 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 Light Wonder and Playtech Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Light Wonder and Playtech plc, you can compare the effects of market volatilities on Light Wonder 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 Light Wonder with a short position of Playtech Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Light Wonder and Playtech Plc.

Diversification Opportunities for Light Wonder and Playtech Plc

-0.01
  Correlation Coefficient

Good diversification

The 3 months correlation between Light and Playtech is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Light Wonder and Playtech plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playtech plc and Light Wonder 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 Light Wonder 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 Light Wonder i.e., Light Wonder and Playtech Plc go up and down completely randomly.

Pair Corralation between Light Wonder and Playtech Plc

Considering the 90-day investment horizon Light Wonder is expected to generate 1.84 times more return on investment than Playtech Plc. However, Light Wonder is 1.84 times more volatile than Playtech plc. It trades about 0.04 of its potential returns per unit of risk. Playtech plc is currently generating about -0.04 per unit of risk. If you would invest  8,522  in Light Wonder on December 28, 2024 and sell it today you would earn a total of  387.00  from holding Light Wonder or generate 4.54% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy98.36%
ValuesDaily Returns

Light Wonder  vs.  Playtech plc

 Performance 
       Timeline  
Light Wonder 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Light Wonder are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Light Wonder may actually be approaching a critical reversion point that can send shares even higher in April 2025.
Playtech plc 

Risk-Adjusted Performance

Very Weak

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

Light Wonder and Playtech Plc Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Light Wonder and Playtech Plc

The main advantage of trading using opposite Light Wonder and Playtech Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Light Wonder 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 Light Wonder 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.
Check out your portfolio center.
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .

Other Complementary Tools

Volatility Analysis
Get historical volatility and risk analysis based on latest market data
Price Exposure Probability
Analyze equity upside and downside potential for a given time horizon across multiple markets
Headlines Timeline
Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity
Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated
Insider Screener
Find insiders across different sectors to evaluate their impact on performance