Correlation Between Playtech Plc and Cenovus

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

By analyzing existing cross correlation between Playtech plc and Cenovus Energy 675, you can compare the effects of market volatilities on Playtech Plc and Cenovus 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 Cenovus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playtech Plc and Cenovus.

Diversification Opportunities for Playtech Plc and Cenovus

0.13

Correlation Coefficient

Playtech Plc  Cenovus

Average diversification

The 3 months correlation between Playtech and Cenovus is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Playtech plc and Cenovus Energy 675 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cenovus Energy 675 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 Cenovus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cenovus Energy 675 has no effect on the direction of Playtech Plc i.e., Playtech Plc and Cenovus go up and down completely randomly.

Pair Corralation between Playtech Plc and Cenovus

Assuming the 90 days horizon Playtech plc is expected to under-perform the Cenovus. In addition to that, Playtech Plc is 1.52 times more volatile than Cenovus Energy 675. It trades about -0.04 of its total potential returns per unit of risk. Cenovus Energy 675 is currently generating about 0.04 per unit of volatility. If you would invest  10,735  in Cenovus Energy 675 on December 25, 2024 and sell it today you would earn a total of  154.00  from holding Cenovus Energy 675 or generate 1.43% return on investment over 90 days.

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

Playtech plc  vs.  Cenovus Energy 675

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.

Cenovus Energy 675

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cenovus Energy 675 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Cenovus is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Playtech Plc and Cenovus

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

The idea behind Playtech plc and Cenovus Energy 675 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.