Correlation Between Shenandoah Telecommunicatio and PLAYTECH

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

By analyzing existing cross correlation between Shenandoah Telecommunications and PLAYTECH, you can compare the effects of market volatilities on Shenandoah Telecommunicatio and PLAYTECH 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 Shenandoah Telecommunicatio with a short position of PLAYTECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenandoah Telecommunicatio and PLAYTECH.

Diversification Opportunities for Shenandoah Telecommunicatio and PLAYTECH

0.05

Correlation Coefficient

Shenandoah Telecommunicatio  PLAYTECH

Significant diversification

The 3 months correlation between Shenandoah and PLAYTECH is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Shenandoah Telecommunications and PLAYTECH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLAYTECH and Shenandoah Telecommunicatio 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 Shenandoah Telecommunications are associated (or correlated) with PLAYTECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLAYTECH has no effect on the direction of Shenandoah Telecommunicatio i.e., Shenandoah Telecommunicatio and PLAYTECH go up and down completely randomly.

Pair Corralation between Shenandoah Telecommunicatio and PLAYTECH

Assuming the 90 days horizon Shenandoah Telecommunications is expected to generate 4.55 times more return on investment than PLAYTECH. However, Shenandoah Telecommunicatio is 4.55 times more volatile than PLAYTECH. It trades about 0.02 of its potential returns per unit of risk. PLAYTECH is currently generating about -0.04 per unit of risk. If you would invest  1,191  in Shenandoah Telecommunications on October 8, 2024 and sell it today you would lose (1.00) from holding Shenandoah Telecommunications or give up 0.08% of portfolio value over 90 days.

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

Shenandoah Telecommunications  vs.  PLAYTECH

Shenandoah Telecommunicatio

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shenandoah Telecommunications are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Shenandoah Telecommunicatio is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

PLAYTECH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PLAYTECH has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, PLAYTECH is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Shenandoah Telecommunicatio and PLAYTECH

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

The idea behind Shenandoah Telecommunications and PLAYTECH 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.