Correlation Between Playtech Plc and ASPEN TECHINC

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

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

Diversification Opportunities for Playtech Plc and ASPEN TECHINC

0.34

Correlation Coefficient

Playtech Plc  ASPEN TECHINC

Weak diversification

The 3 months correlation between Playtech and ASPEN is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Playtech plc and ASPEN TECHINC DL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASPEN TECHINC DL 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 ASPEN TECHINC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASPEN TECHINC DL has no effect on the direction of Playtech Plc i.e., Playtech Plc and ASPEN TECHINC go up and down completely randomly.

Pair Corralation between Playtech Plc and ASPEN TECHINC

Assuming the 90 days trading horizon Playtech Plc is expected to generate 5.49 times less return on investment than ASPEN TECHINC. But when comparing it to its historical volatility, Playtech plc is 1.01 times less risky than ASPEN TECHINC. It trades about 0.02 of its potential returns per unit of risk. ASPEN TECHINC DL is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  23,400  in ASPEN TECHINC DL on November 29, 2024 and sell it today you would earn a total of  1,600  from holding ASPEN TECHINC DL or generate 6.84% 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.  ASPEN TECHINC DL

Playtech plc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Playtech plc are ranked lower than 1 (%) 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 current stock price uproar, may contribute to short-horizon losses for the private investors.

ASPEN TECHINC DL

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ASPEN TECHINC DL are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ASPEN TECHINC may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Playtech Plc and ASPEN TECHINC

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

The idea behind Playtech plc and ASPEN TECHINC DL 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.