Correlation Between Playtech Plc and Vishay Precision

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

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

Diversification Opportunities for Playtech Plc and Vishay Precision

0.09

Correlation Coefficient

Playtech Plc  Vishay Precision

Significant diversification

The 3 months correlation between Playtech and Vishay is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Playtech plc and Vishay Precision Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vishay Precision 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 Vishay Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vishay Precision has no effect on the direction of Playtech Plc i.e., Playtech Plc and Vishay Precision go up and down completely randomly.

Pair Corralation between Playtech Plc and Vishay Precision

Assuming the 90 days horizon Playtech plc is expected to under-perform the Vishay Precision. But the pink sheet apears to be less risky and, when comparing its historical volatility, Playtech plc is 1.53 times less risky than Vishay Precision. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Vishay Precision Group is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  2,388  in Vishay Precision Group on December 26, 2024 and sell it today you would lose (49.00) from holding Vishay Precision Group or give up 2.05% of portfolio value over 90 days.

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

Playtech plc  vs.  Vishay Precision Group

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

Vishay Precision

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vishay Precision Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Vishay Precision is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Playtech Plc and Vishay Precision

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

The idea behind Playtech plc and Vishay Precision 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.