Correlation Between Perceptive Capital and Playtech Plc

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

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

Diversification Opportunities for Perceptive Capital and Playtech Plc

0.71

Correlation Coefficient

Perceptive Capital  Playtech Plc

Poor diversification

The 3 months correlation between Perceptive and Playtech is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Perceptive Capital Solutions and Playtech plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playtech plc and Perceptive Capital 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 Perceptive Capital Solutions 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 Perceptive Capital i.e., Perceptive Capital and Playtech Plc go up and down completely randomly.

Pair Corralation between Perceptive Capital and Playtech Plc

Given the investment horizon of 90 days Perceptive Capital Solutions is expected to generate 36.44 times more return on investment than Playtech Plc. However, Perceptive Capital is 36.44 times more volatile than Playtech plc. It trades about 0.09 of its potential returns per unit of risk. Playtech plc is currently generating about 0.04 per unit of risk. If you would invest  0.00  in Perceptive Capital Solutions on September 3, 2024 and sell it today you would earn a total of  1,013  from holding Perceptive Capital Solutions or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	24.44%
Values	Daily Returns

Perceptive Capital Solutions  vs.  Playtech plc

Perceptive Capital

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Perceptive Capital Solutions are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Perceptive Capital is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Playtech plc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Playtech plc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Playtech Plc reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Perceptive Capital and Playtech Plc

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