Correlation Between Playtech Plc and Vishay Intertechnology

Can any of the company-specific risk be diversified away by investing in both Playtech Plc and Vishay Intertechnology 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 Intertechnology 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 Intertechnology, you can compare the effects of market volatilities on Playtech Plc and Vishay Intertechnology 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 Intertechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playtech Plc and Vishay Intertechnology.

Diversification Opportunities for Playtech Plc and Vishay Intertechnology

-0.1

Correlation Coefficient

Playtech Plc  Vishay Intertechnology

Good diversification

The 3 months correlation between Playtech and Vishay is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Playtech plc and Vishay Intertechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vishay Intertechnology 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 Intertechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vishay Intertechnology has no effect on the direction of Playtech Plc i.e., Playtech Plc and Vishay Intertechnology go up and down completely randomly.

Pair Corralation between Playtech Plc and Vishay Intertechnology

Assuming the 90 days horizon Playtech plc is expected to generate 1.23 times more return on investment than Vishay Intertechnology. However, Playtech Plc is 1.23 times more volatile than Vishay Intertechnology. It trades about 0.04 of its potential returns per unit of risk. Vishay Intertechnology is currently generating about -0.02 per unit of risk. If you would invest  590.00  in Playtech plc on October 12, 2024 and sell it today you would earn a total of  256.00  from holding Playtech plc or generate 43.39% return on investment over 90 days.

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

Playtech plc  vs.  Vishay Intertechnology

Playtech plc

Risk-Adjusted Performance

4 of 100

Insignificant

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 conflicting fundamental indicators, Playtech Plc may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Vishay Intertechnology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vishay Intertechnology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Playtech Plc and Vishay Intertechnology

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

The idea behind Playtech plc and Vishay Intertechnology 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.