Correlation Between Playtech Plc and Altria

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

By analyzing existing cross correlation between Playtech plc and Altria Group 995, you can compare the effects of market volatilities on Playtech Plc and Altria 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 Altria. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playtech Plc and Altria.

Diversification Opportunities for Playtech Plc and Altria

0.43

Correlation Coefficient

Playtech Plc  Altria

Very weak diversification

The 3 months correlation between Playtech and Altria is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Playtech plc and Altria Group 995 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altria Group 995 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 Altria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altria Group 995 has no effect on the direction of Playtech Plc i.e., Playtech Plc and Altria go up and down completely randomly.

Pair Corralation between Playtech Plc and Altria

Assuming the 90 days horizon Playtech plc is expected to under-perform the Altria. In addition to that, Playtech Plc is 1.02 times more volatile than Altria Group 995. It trades about -0.04 of its total potential returns per unit of risk. Altria Group 995 is currently generating about 0.03 per unit of volatility. If you would invest  13,730  in Altria Group 995 on December 11, 2024 and sell it today you would earn a total of  215.00  from holding Altria Group 995 or generate 1.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	69.49%
Values	Daily Returns

Playtech plc  vs.  Altria Group 995

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

Altria Group 995

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Altria Group 995 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Altria is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Playtech Plc and Altria

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

The idea behind Playtech plc and Altria Group 995 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.