Correlation Between PLAYTECH and COMPASS GROUP

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

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

Diversification Opportunities for PLAYTECH and COMPASS GROUP

0.0

Correlation Coefficient

PLAYTECH  COMPASS GROUP

Pay attention - limited upside

The 3 months correlation between PLAYTECH and COMPASS is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding PLAYTECH and COMPASS GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COMPASS GROUP and PLAYTECH 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 PLAYTECH are associated (or correlated) with COMPASS GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COMPASS GROUP has no effect on the direction of PLAYTECH i.e., PLAYTECH and COMPASS GROUP go up and down completely randomly.

Pair Corralation between PLAYTECH and COMPASS GROUP

If you would invest (100.00) in COMPASS GROUP on October 9, 2024 and sell it today you would earn a total of  100.00  from holding COMPASS GROUP or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

PLAYTECH  vs.  COMPASS GROUP

PLAYTECH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PLAYTECH has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, PLAYTECH is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

COMPASS GROUP

Risk-Adjusted Performance

0 of 100

Good

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

Pair Trading with PLAYTECH and COMPASS GROUP

The main advantage of trading using opposite PLAYTECH and COMPASS GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PLAYTECH position performs unexpectedly, COMPASS GROUP 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 COMPASS GROUP will offset losses from the drop in COMPASS GROUP's long position.

The idea behind PLAYTECH and COMPASS GROUP 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 .