Correlation Between Playtech Plc and Flow Traders

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

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

Diversification Opportunities for Playtech Plc and Flow Traders

-0.48

Correlation Coefficient

Playtech Plc  Flow Traders

Very good diversification

The 3 months correlation between Playtech and Flow is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Playtech Plc and Flow Traders NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flow Traders NV 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 Flow Traders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flow Traders NV has no effect on the direction of Playtech Plc i.e., Playtech Plc and Flow Traders go up and down completely randomly.

Pair Corralation between Playtech Plc and Flow Traders

Assuming the 90 days trading horizon Playtech Plc is expected to generate 1.08 times more return on investment than Flow Traders. However, Playtech Plc is 1.08 times more volatile than Flow Traders NV. It trades about 0.05 of its potential returns per unit of risk. Flow Traders NV is currently generating about 0.02 per unit of risk. If you would invest  50,900  in Playtech Plc on September 20, 2024 and sell it today you would earn a total of  22,200  from holding Playtech Plc or generate 43.61% return on investment over 90 days.

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

Playtech Plc  vs.  Flow Traders NV

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.

Flow Traders NV

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Flow Traders NV are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Flow Traders unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Playtech Plc and Flow Traders

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

The idea behind Playtech Plc and Flow Traders NV 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.