Correlation Between Pembina Pipeline and Playtech Plc

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

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

Diversification Opportunities for Pembina Pipeline and Playtech Plc

-0.14

Correlation Coefficient

Pembina Pipeline  Playtech Plc

Good diversification

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

Pair Corralation between Pembina Pipeline and Playtech Plc

Assuming the 90 days horizon Pembina Pipeline is expected to generate 1.17 times less return on investment than Playtech Plc. In addition to that, Pembina Pipeline is 1.18 times more volatile than Playtech plc. It trades about 0.05 of its total potential returns per unit of risk. Playtech plc is currently generating about 0.07 per unit of volatility. If you would invest  840.00  in Playtech plc on December 22, 2024 and sell it today you would earn a total of  39.00  from holding Playtech plc or generate 4.64% return on investment over 90 days.

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

Pembina Pipeline Corp  vs.  Playtech plc

Pembina Pipeline Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pembina Pipeline Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Pembina Pipeline is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Playtech plc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Playtech plc are ranked lower than 5 (%) 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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Pembina Pipeline and Playtech Plc

The main advantage of trading using opposite Pembina Pipeline and Playtech Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pembina Pipeline 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 Pembina Pipeline Corp 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 Global Correlations module to find global opportunities by holding instruments from different markets.