Correlation Between Playtech Plc and Hasbro

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

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

Diversification Opportunities for Playtech Plc and Hasbro

-0.66

Correlation Coefficient

Playtech Plc  Hasbro

Excellent diversification

The 3 months correlation between Playtech and Hasbro is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Playtech plc and Hasbro Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hasbro 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 Hasbro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hasbro Inc has no effect on the direction of Playtech Plc i.e., Playtech Plc and Hasbro go up and down completely randomly.

Pair Corralation between Playtech Plc and Hasbro

Assuming the 90 days horizon Playtech plc is expected to generate 1.95 times more return on investment than Hasbro. However, Playtech Plc is 1.95 times more volatile than Hasbro Inc. It trades about 0.1 of its potential returns per unit of risk. Hasbro Inc is currently generating about -0.02 per unit of risk. If you would invest  815.00  in Playtech plc on September 3, 2024 and sell it today you would earn a total of  135.00  from holding Playtech plc or generate 16.56% return on investment over 90 days.

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

Playtech plc  vs.  Hasbro Inc

Playtech plc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Playtech plc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Playtech Plc reported solid returns over the last few months and may actually be approaching a breakup point.

Hasbro Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hasbro Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Hasbro is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Playtech Plc and Hasbro

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

The idea behind Playtech plc and Hasbro 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.

Check out your portfolio center.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.