Correlation Between Playtech Plc and Corsair Gaming

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

By analyzing existing cross correlation between Playtech plc and Corsair Gaming, you can compare the effects of market volatilities on Playtech Plc and Corsair Gaming 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 Corsair Gaming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playtech Plc and Corsair Gaming.

Diversification Opportunities for Playtech Plc and Corsair Gaming

0.15

Correlation Coefficient

Playtech Plc  Corsair Gaming

Average diversification

The 3 months correlation between Playtech and Corsair is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Playtech plc and Corsair Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corsair Gaming 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 Corsair Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corsair Gaming has no effect on the direction of Playtech Plc i.e., Playtech Plc and Corsair Gaming go up and down completely randomly.

Pair Corralation between Playtech Plc and Corsair Gaming

Assuming the 90 days trading horizon Playtech plc is expected to generate 0.22 times more return on investment than Corsair Gaming. However, Playtech plc is 4.45 times less risky than Corsair Gaming. It trades about -0.2 of its potential returns per unit of risk. Corsair Gaming is currently generating about -0.31 per unit of risk. If you would invest  867.00  in Playtech plc on October 4, 2024 and sell it today you would lose (25.00) from holding Playtech plc or give up 2.88% of portfolio value over 90 days.

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

Playtech plc  vs.  Corsair Gaming

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.

Corsair Gaming

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Corsair Gaming has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Corsair Gaming 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 Plc and Corsair Gaming

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

The idea behind Playtech plc and Corsair Gaming 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.