Correlation Between Playtech Plc and Axway Software

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

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

Diversification Opportunities for Playtech Plc and Axway Software

-0.04

Correlation Coefficient

Playtech Plc  Axway Software

Good diversification

The 3 months correlation between Playtech and Axway is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Playtech plc and Axway Software SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axway Software SA and Playtech Plc 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 plc are associated (or correlated) with Axway Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axway Software SA has no effect on the direction of Playtech Plc i.e., Playtech Plc and Axway Software go up and down completely randomly.

Pair Corralation between Playtech Plc and Axway Software

Assuming the 90 days trading horizon Playtech plc is expected to under-perform the Axway Software. But the stock apears to be less risky and, when comparing its historical volatility, Playtech plc is 1.09 times less risky than Axway Software. The stock trades about -0.01 of its potential returns per unit of risk. The Axway Software SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,580  in Axway Software SA on October 24, 2024 and sell it today you would earn a total of  60.00  from holding Axway Software SA or generate 2.33% return on investment over 90 days.

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

Playtech plc  vs.  Axway Software SA

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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Axway Software SA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Axway Software SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Axway Software 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 Playtech Plc and Axway Software

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

The idea behind Playtech plc and Axway Software SA 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.