Correlation Between Playtech Plc and Sanyo Special

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

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

Diversification Opportunities for Playtech Plc and Sanyo Special

0.29

Correlation Coefficient

Playtech Plc  Sanyo Special

Modest diversification

The 3 months correlation between Playtech and Sanyo is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Playtech plc and Sanyo Special Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanyo Special Steel 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 Sanyo Special. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanyo Special Steel has no effect on the direction of Playtech Plc i.e., Playtech Plc and Sanyo Special go up and down completely randomly.

Pair Corralation between Playtech Plc and Sanyo Special

Assuming the 90 days horizon Playtech plc is expected to generate 0.75 times more return on investment than Sanyo Special. However, Playtech plc is 1.33 times less risky than Sanyo Special. It trades about -0.04 of its potential returns per unit of risk. Sanyo Special Steel is currently generating about -0.13 per unit of risk. If you would invest  943.00  in Playtech plc on December 27, 2024 and sell it today you would lose (43.00) from holding Playtech plc or give up 4.56% 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.  Sanyo Special Steel

Playtech plc

Risk-Adjusted Performance

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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

Sanyo Special Steel

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sanyo Special Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Playtech Plc and Sanyo Special

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

The idea behind Playtech plc and Sanyo Special Steel 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.