Correlation Between Playtech Plc and Life Time

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

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

Diversification Opportunities for Playtech Plc and Life Time

-0.34

Correlation Coefficient

Playtech Plc  Life Time

Very good diversification

The 3 months correlation between Playtech and Life is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Playtech plc and Life Time Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Time Group 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 Life Time. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life Time Group has no effect on the direction of Playtech Plc i.e., Playtech Plc and Life Time go up and down completely randomly.

Pair Corralation between Playtech Plc and Life Time

Assuming the 90 days horizon Playtech plc is expected to generate 0.21 times more return on investment than Life Time. However, Playtech plc is 4.68 times less risky than Life Time. It trades about -0.03 of its potential returns per unit of risk. Life Time Group is currently generating about -0.12 per unit of risk. If you would invest  950.00  in Playtech plc on September 23, 2024 and sell it today you would lose (7.00) from holding Playtech plc or give up 0.74% of portfolio value over 90 days.

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

Playtech plc  vs.  Life Time Group

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 unsteady fundamental indicators, Playtech Plc reported solid returns over the last few months and may actually be approaching a breakup point.

Life Time Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Life Time Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Playtech Plc and Life Time

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

The idea behind Playtech plc and Life Time 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.