Correlation Between Playtech Plc and Zurich Insurance

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

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

Diversification Opportunities for Playtech Plc and Zurich Insurance

-0.02

Correlation Coefficient

Playtech Plc  Zurich Insurance

Good diversification

The 3 months correlation between Playtech and Zurich is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Playtech plc and Zurich Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zurich Insurance 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 Zurich Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zurich Insurance has no effect on the direction of Playtech Plc i.e., Playtech Plc and Zurich Insurance go up and down completely randomly.

Pair Corralation between Playtech Plc and Zurich Insurance

Assuming the 90 days trading horizon Playtech plc is expected to generate 1.09 times more return on investment than Zurich Insurance. However, Playtech Plc is 1.09 times more volatile than Zurich Insurance Group. It trades about 0.11 of its potential returns per unit of risk. Zurich Insurance Group is currently generating about 0.06 per unit of risk. If you would invest  507.00  in Playtech plc on October 5, 2024 and sell it today you would earn a total of  335.00  from holding Playtech plc or generate 66.07% 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.  Zurich Insurance Group

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.

Zurich Insurance

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Zurich Insurance Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile forward indicators, Zurich Insurance may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Playtech Plc and Zurich Insurance

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

The idea behind Playtech plc and Zurich Insurance 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.

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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.