Correlation Between Playtech Plc and Amgen

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

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

Diversification Opportunities for Playtech Plc and Amgen

0.36

Correlation Coefficient

Playtech Plc  Amgen

Weak diversification

The 3 months correlation between Playtech and Amgen is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Playtech plc and Amgen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amgen Inc 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 Amgen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amgen Inc has no effect on the direction of Playtech Plc i.e., Playtech Plc and Amgen go up and down completely randomly.

Pair Corralation between Playtech Plc and Amgen

Assuming the 90 days trading horizon Playtech Plc is expected to generate 2.95 times less return on investment than Amgen. But when comparing it to its historical volatility, Playtech plc is 1.08 times less risky than Amgen. It trades about 0.07 of its potential returns per unit of risk. Amgen Inc is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  25,087  in Amgen Inc on December 22, 2024 and sell it today you would earn a total of  3,843  from holding Amgen Inc or generate 15.32% return on investment over 90 days.

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

Playtech plc  vs.  Amgen Inc

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.

Amgen Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amgen Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Amgen reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Playtech Plc and Amgen

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

The idea behind Playtech plc and Amgen Inc 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.