Correlation Between Playtech Plc and Country Garden

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

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

Diversification Opportunities for Playtech Plc and Country Garden

-0.06

Correlation Coefficient

Playtech Plc  Country Garden

Good diversification

The 3 months correlation between Playtech and Country is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Playtech plc and Country Garden Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Country Garden Holdings 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 Country Garden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Country Garden Holdings has no effect on the direction of Playtech Plc i.e., Playtech Plc and Country Garden go up and down completely randomly.

Pair Corralation between Playtech Plc and Country Garden

If you would invest  18.00  in Country Garden Holdings on October 24, 2024 and sell it today you would earn a total of  0.00  from holding Country Garden Holdings or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

Playtech plc  vs.  Country Garden Holdings

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. Despite nearly stable fundamental indicators, Playtech Plc is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Country Garden Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Country Garden Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Country Garden may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Playtech Plc and Country Garden

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

The idea behind Playtech plc and Country Garden Holdings 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.