Correlation Between Delta Electronics and Playtech Plc

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

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

Diversification Opportunities for Delta Electronics and Playtech Plc

-0.4

Correlation Coefficient

Delta Electronics  Playtech Plc

Very good diversification

The 3 months correlation between Delta and Playtech is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Delta Electronics Public and Playtech plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playtech plc and Delta Electronics 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 Delta Electronics Public 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 Delta Electronics i.e., Delta Electronics and Playtech Plc go up and down completely randomly.

Pair Corralation between Delta Electronics and Playtech Plc

Assuming the 90 days trading horizon Delta Electronics Public is expected to generate 2.08 times more return on investment than Playtech Plc. However, Delta Electronics is 2.08 times more volatile than Playtech plc. It trades about 0.07 of its potential returns per unit of risk. Playtech plc is currently generating about 0.04 per unit of risk. If you would invest  144.00  in Delta Electronics Public on October 11, 2024 and sell it today you would earn a total of  250.00  from holding Delta Electronics Public or generate 173.61% return on investment over 90 days.

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

Delta Electronics Public  vs.  Playtech plc

Delta Electronics Public

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Electronics Public are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Delta Electronics reported solid returns over the last few months and may actually be approaching a breakup point.

Playtech plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Playtech plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Playtech Plc is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Delta Electronics and Playtech Plc

The main advantage of trading using opposite Delta Electronics and Playtech Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Electronics 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 Delta Electronics Public 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.