Correlation Between Playtech Plc and BRP

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

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

Diversification Opportunities for Playtech Plc and BRP

-0.89

Correlation Coefficient

Playtech Plc  BRP

Pay attention - limited upside

The 3 months correlation between Playtech and BRP is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Playtech plc and BRP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRP 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 BRP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRP Inc has no effect on the direction of Playtech Plc i.e., Playtech Plc and BRP go up and down completely randomly.

Pair Corralation between Playtech Plc and BRP

Assuming the 90 days horizon Playtech plc is expected to generate 1.11 times more return on investment than BRP. However, Playtech Plc is 1.11 times more volatile than BRP Inc. It trades about 0.05 of its potential returns per unit of risk. BRP Inc is currently generating about -0.02 per unit of risk. If you would invest  590.00  in Playtech plc on September 18, 2024 and sell it today you would earn a total of  353.00  from holding Playtech plc or generate 59.83% return on investment over 90 days.

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

Playtech plc  vs.  BRP Inc

Playtech plc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Playtech plc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Playtech Plc reported solid returns over the last few months and may actually be approaching a breakup point.

BRP Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BRP Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Playtech Plc and BRP

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

The idea behind Playtech plc and BRP 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.