Correlation Between Playtech Plc and Sonida Senior

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

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

Diversification Opportunities for Playtech Plc and Sonida Senior

0.33

Correlation Coefficient

Playtech Plc  Sonida Senior

Weak diversification

The 3 months correlation between Playtech and Sonida is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Playtech plc and Sonida Senior Living in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonida Senior Living 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 Sonida Senior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonida Senior Living has no effect on the direction of Playtech Plc i.e., Playtech Plc and Sonida Senior go up and down completely randomly.

Pair Corralation between Playtech Plc and Sonida Senior

Assuming the 90 days horizon Playtech plc is expected to generate 1.03 times more return on investment than Sonida Senior. However, Playtech Plc is 1.03 times more volatile than Sonida Senior Living. It trades about -0.23 of its potential returns per unit of risk. Sonida Senior Living is currently generating about -0.38 per unit of risk. If you would invest  943.00  in Playtech plc on October 10, 2024 and sell it today you would lose (97.00) from holding Playtech plc or give up 10.29% of portfolio value over 90 days.

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

Playtech plc  vs.  Sonida Senior Living

Playtech plc

Risk-Adjusted Performance

4 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Playtech plc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Playtech Plc may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Sonida Senior Living

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sonida Senior Living has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Sonida Senior is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Playtech Plc and Sonida Senior

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

The idea behind Playtech plc and Sonida Senior Living 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.